Structure guide
Private limited company
The company is a separate legal entity. Shareholders own it, directors run it and company money and assets belong to the company.
What separation means
The company can own assets, enter contracts, employ people, owe money and be taxed in its own name. The director and shareholder may be the same person, but their legal roles remain distinct.
Regular responsibilities
- Maintain company and accounting records.
- File accounts and confirmation statements.
- Complete Corporation Tax reporting.
- Operate payroll where required.
- Record dividends, expenses and directors’ loans correctly.
Taking money
Money cannot simply be treated as personal drawings. Salary, dividends, reimbursed expenses, benefits and directors’ loans have different company-law and tax treatment.
Limited liability has limits
Personal guarantees, misconduct, insolvency responsibilities, tax debts in particular circumstances and actions outside proper authority can still matter. Insurance and sound contracts remain important.
When to compare another structure
A company may add cost and formality without enough practical benefit where one person runs a relatively straightforward, lower-risk business, expects to withdraw most profits and has little need for outside investment or a future sale of shares. A partnership or LLP may also deserve comparison where several active owners want to operate together rather than use a shareholder-and-director model.
Do not incorporate from a headline tax comparison
A meaningful comparison includes company tax, personal tax on withdrawals, payroll, benefits, pension plans, administration, retained profit, other income and the cost of changing or closing the structure.