BESPOKE

A public company is a corporation whose ownership is open to the public.  Anyone can buy shares in the company’s stocks.

A limited company is a corporation in which an individual’s financial liability for the company is restricted to a fixed sum – this sum is usually the value of their investment.

A PLC is a combination of these two concepts – it is a public company whose shareholders (who could, theoretically, be anyone) are responsible for the company’s financial liabilities to the extent of their investment.

The other key point of note is that before a PLC can start business, it must have allotted shares to the total value of at least £50,000.

In contrast to a public company, a private limited company cannot be owned by any members of the public.  It will instead be owned by an NGO (non-government organisation) or a relatively small number of shareholders, and the sale of company shares is handled privately.

However, these companies are limited, like PLCs, and this has the same implications for a private company as it does for a public company.  Once again, an individual is only responsible for the business’s financial liabilities to the extent that they invested in the company.

Private limited companies are one of the most common types of companies.

A company that is limited by guarantee is very different to the two previous types of limited company.  In this case, the individuals are not responsible for a fixed sum based on their investment, as this company status is reserved for companies that don’t have shareholders, like smaller, non-profit organisations.

Instead of shareholders, these companies typically have a group of members who act as guarantors and agree to contribute a nominal sum towards the winding up of the company, in the case of such an event occurring.

According to UK law, these companies have to include ‘Limited’ in their names, but exceptions can be made, for example, in the case of companies that are not distributing their profits to its members.

The first thing to note about LLPs is that they are not legally treated as partnerships in the UK, instead, they are treated as incorporated bodies that are more similar to the other types of company above.

For a business to be an LLP, some or all of the partners have to have limited liabilities, which means that they are only responsible for their own misconduct or negligence, rather than being responsible as a collective (which is the more traditional partnership model).

Another key element of an LLP is that, unlike other corporations, the partners are allowed to directly manage the business.  In other company types, the shareholders have to vote to elect a board of directors, and the board employs other people to manage the company.

A partnership exists when two or more people start commence in business together with a view to making a profit.  A partnership must be run on a commercial basis.  A business is defined by s45 of the 1890 Partnership Act as a trade, occupation or profession.

A conventional partnership is not a separate legal entity from its owners.  It is unable to hold land and property in its name.

Partnerships are transparent for tax purposes.  This means that each individual is taxed as an individual, as opposed to the partnership being taxed as a separate body distinct from its owners.

Certain “persons” are unable to form partnerships – charities and not-for profit organisations.

When a company is a partner in a partnership it is taxed on its profits according to corporation tax rules.

A sole trader is a self-employed person who owns and runs their own business as an individual.  A sole trader business doesn’t have any legal identity separate to its owner, leading many to say that as a sole trader you are the business.  The owner is know as the sole proprietor and will usually have a business trading name – for example John Smith t/a Smiths Motors

A person is self-employed if they run their business for themselves and take responsibility for its success or failure.

Self-employed workers aren’t paid through PAYE, and they don’t have the employment rights and responsibilities of employees.

Business entity formed by two or more professionals such as accountants, doctors, or solicitors who provide professional services to the public.

This includes all types of educational establishment from private schools, to local authority and academy status, and further education and universities.

We can assist charities that are registered with the Charities Commission.