A limited company is a type of business whereby the owner’s liability is limited to the amount they have invested in the shares or guaranteed to the company. In other words, the owners of a limited company are not personally liable for the debts of the company.

Small businesses generally choose to trade through a limited company as they can be much more tax efficient compared with trading as a sole trader or partnership.

It does however need to be structured in the right way to take advantage of the savings available.

A limited company is a completely separate entity from its owners. Everything from the company bank account, to ownership of assets and any involvement in tenders or contracts is purely company business and separate from the interests of the company's owners
or shareholders.

In comparison, a sole trader and their business is treated as a single entity for tax and administrative purposes.

Did this answer your question?