Meaning of the Term LTD
The word LTD is the Standard Abbreviation for Limited. It is a form of corporate structure that can be found in the UK and many other countries. Here the liability is limited to the capital invested by the shareholders.
What is a Limited Company?
A Limited Company is a form of business that is legally separated from the owners and Directors. When forming a company in the UK it must be incorporated and registered with UK Companies House. The company will then get a status of being legally separated from the people who run it. It will also be allocated with a unique company registration number. Any information about the Limited Company is in the public register which is visible to the public. To become a Limited Company in the UK, you need to have a debit or credit card or PayPal account. A company can be registered as quickly as two hours. Alternatively you can go via an agent who can assist with the formation process. There are 2 million trading limited companies in the UK.
There are several different kinds of limited companies. They are separated by their business structures an depend on many factors like how many shareholders there are, the relationship between the shareholders and public etc. The most famous type of Limited Company is a Private Limited Company which is managed by shares.
Categorisation of UK Limited Companies
Private Limited Company Limited by Shares (LTD)
Members of the public cannot buy shares in such companies. Shareholders have a liability as per the same percentagethat they have invested. This means that the liability of the shareholders is limited within the company.
Private Limited Company Limited by Guarantee (LBG)
This type of structure is usually popular with not for profit and charity organisations. A company that is LBG does not have shareholders. Board members, who are guarantors, are liable for decision making and the implementation of those decisions.
Public Limited Company (PLC)
The members may be shareholders in case of a public company.
Limited Liability Partnership (LLP)
This company is also limited by shares. Partners here are responsible for not only shares, but also for other important aspects related to business.
Private UnLimited Company
Here all shareholders are equally responsible for the business.
Advantages of a Limited Company
There are many advantages of having a Limited Company. The main ones are that they are tax-efficient, have limited liability, form a separate entity, carry a professional status, can form a company pension, and allow you to maximise tax-free income.Limited companies can be more efficiently run than privately owned businesses. As common people are allowed to hold shares, therefore, a UK LTD company can easily collect a massive amount of funds if expansion is on their cards.