companies house made easy

In basic terms the limited liability company allows commerce to flourish by enabling credit to be extended with minimum risk to all parties and is an important factor in the trading success of the United Kingdom. In a limited company, the owners (shareholders) are not personally liable for the debts of their business or any claims made against the company.

This legal limitation, called "limited liability" is created through registration at Companies House. The process is known as "incorporation". It is obvious why the majority of small business owners are so attracted by limited liability. Almost every business will accumulate debts that create the risk of being sued.

avoiding danger

Without limiting your personal liability, every business owner would be completely legally responsible for the company debts and your personal assets would therefore be at risk. With limited liability, personal assets can remain in tact, even if the business fails under a burden of debt. A UK private limited company is able to distributed profits to its shareholders by way of a dividend.

taxation

The rules on both personal and corporate taxation are regularly modified by the Chancellor of the day but it is normally the case that profits distributed through dividends are a tax efficient means of rewarding entrepreneurs for the commercial risks they take.

The most common form of limited liability in the UK is the private limited company of which there are over one million in currently registered at Companies House. These companies can be recognised easily by the suffix Limited or LTD at the end of their name.

public information

Limited liability companies are obliged by law to maintain records of their affairs at Companies House. In this way it is possible for anybody to purchase copies of this information before trading with the company.

This simple mechanism balances the benefit of limited liability given to the owners of companies by allowing their creditors to assess the risks they may be taking in providing goods and services on credit.