The different types of a limited company formation in the uk
September 27, 2016
If you want to start your off shore business in the UK, you probably have heard that the best way to do it is to set up a limited company. But it is not as easy as you can imagine. There are at least three main types of a limited company and you should come to know the particulars of each type for doing business well.
Let’s consider the main types of an offshore incorporations limited:
Limited by Shares Company
This is the most popular structure because:
- Limited by Shares Company means that the liability of shareholders (or owners) is limited. If the company fails or is declared as bankrupt, shareholders have to pay only for paid shares but no more. Such structure guarantees additional protection for owners if business doesn’t prosper.
- Shareholders can dispose and sell shares at any moment.
- Limited by Shares Company must have a director and a shareholder. One person can operate as both director and shareholder.
- The law protects the business name of Limited by Shares Company and nobody can take it. The same applies for limited liability of owners.
- The income is divided by means of dividends that provide the advantageous taxation.
Limited by Guarantee Company
Limited by Guarantee Company is similar on Limited by Shares Company in some moments. But at the same time this structure has significant differences. Among them are:
- Limited by Guarantee Company is intended for non-profit business and usually is used for charities.
- This type of company is usually used by sports clubs, cooperatives, and organizations that serve the needs of society.
- Limited by Guarantee Company must have minimum one director. But instead of shareholders there are must be persons who act as guarantors. However, such company can be created by one person.
- Guarantors do not share profits among themselves of Limited by Guarantee Company. All income is reinvested into the non-profit goals.
Limited Liability Partnership (LLP)
This type of company completely differs from the above-stated limited companies. The main characteristics of LLP are:
- LLP is a partnerships company that isn’t taxed by standard corporate taxes. Instead of it, LLP pay taxes through Self Assessment.
- There are no shareholders, shares or directors in LLP. But it must be managed with at least two nominated members.
- Members of LLP can sell shares only to members of their Limited Liability Partnership.
- Members of LLP sign an agreement where the liability of each member is specified.
If you are not sure what type of company to choose or how to open offshore company, we can help you to make a right choice. Contact our experts and begin your business life today!