
Understand your company's position and learn more about the options available
Require Immediate Support? Free Director Helpline: 0800 644 6080
Free Director Helpline: 0800 644 6080
Updated:
If you are looking to incorporate your company you may be confused about whether it would be more appropriate to adopt the limited by guarantee or limited by shares model. While the two structures have several similarities, there are some crucial differences, particularly when it comes to how profits can be extracted from the company.
Get an instant understanding of your:
Plus much more ...
Start The 60 Second TestThe most common type of company incorporation in the UK is the limited by shares model. This represents the optimal structure for a company which is set up with the purpose of generating profits for its directors and/or shareholders.
The limited by guarantee model, however, is more suited to not-for-profit organisations such as charities and sports clubs, where any profits made are simply reinvested into the core business activities.
A limited company in the UK must be registered with Companies House. This is done by sending Form IN01, the articles of association, and the memorandum of association, along with a £40 registration fee.
UK’s number one for director advice
We handle more corporate insolvency appointments than any other UK firm; demonstrating our commitment to helping directors and business owners in financial distress.
The team are available now - 0800 644 6080
60 Second Test Find Your Nearest Office
One of the primary advantages of incorporating as a limited company, as opposed to operating as a sole trader, is that as a company director you are able to benefit from limited liability. This provides a valuable level of protection against liability for company debts in the event of the company slipping into insolvency.
So long as no fraudulent trading or any other type of misfeasance has been committed, and excluding any personal guarantees which may have been given, a director’s personal liability for the debts of their company will be limited to the value of his or her shareholding.
This differs from the position an individual operating as a sole trader would be in should the debts of their business become unmanageable. As there is no legal distinction between a sole trader’s business and themselves as an individual, any debts accrued during the course of their business activities are the responsibility of the individual.
Can’t pay CBILS or Bounce Back Loan?
Don't worry - there are thousands of other company directors in the same position. If you are struggling to keep up with your Covid loan repayments, speak to a member of the Real Business Rescue team to discuss your options. It's Free & Confidential.
The team are available now - 0800 644 6080
When a company limited by shares is incorporated, at least one share must be issued; the number of shares allotted to shareholders affects the distribution of dividends, voting rights in shareholder meetings, as well as the extent of shareholders’ liability should the company enter insolvency proceedings. Additional shares can be issued at a later stage in the event of a new business partner joining the firm, or for the purposes of securing investment. Shareholding percentages can be also be altered to reflect a change in ownership through the transfer and re-allotment of existing shares.
If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need.
Call our team today on 0800 644 6080
A company limited by shares can take one of two forms: a public limited company, or a private limited company. The main difference between the two structures comes down to how its shares can be sold and traded. As the name suggests, a public company trades publicly and is able to sell its own shares to the general public and trade on the stock exchange. A private company on the other hand is only able to sell its own shares to interested investors. The vast majority of start-ups are incorporated as private limited companies.
Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.
Complete the below to get in touch
For Ltd Company Directors
Get An Instant Understanding Of Your:
Plus much more ...
We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.
Understand your company's position and learn more about the options available
Find your nearest office - we have more than 100 across the UK. Remote Video Meetings are also available.
Free, confidential, and trusted advice for company directors across the UK.