What is a Limited Company

What is a Limited Company

A limited company is a business organisation that is a distinct legal entity, separate from the company directors and its members and/or shareholders. This means that the liability of directors, members and shareholders is limited by law if the company should face legal action, be declared bankrupt or otherwise find itself in serious trouble.

Limited companies are administrated by company law under the Companies Act 2006 as well as associated legislation, and are the most popular form of incorporated business structure in the UK. According to the most recent government statistics, there are currently around 1.8 million limited companies actively trading in the UK, as opposed to 3.3 million sole traders and 421,000 regular partnerships.

This is a significant increase on 2012, when there were just 1.3 million limited companies actively trading. Although sole traders still outnumber limited companies, their number has only increased by 10%, whereas the number of limited companies has grown by a whopping 38%.

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