What is a private company limited by shares?

The basics

A private company limited by shares is the most common type of company in the UK. Its name usually ends in "Limited" or "Ltd". It is:

• a separate legal entity – the company can own property, sign contracts, employ staff, sue and be sued in its own name
• owned by shareholders – who buy shares in the company
• run by directors – who manage the company and make decisions
• private – it cannot offer its shares to the general public

One person can be the only shareholder and the only director.

What "limited by shares" means

Limited liability means a shareholder's risk is limited to the amount they agreed to pay for their shares. If a shareholder owns 100 shares of £1 each and has paid for them in full, they generally cannot be asked to pay more if the company fails.

This protection is not absolute. Directors can become personally liable in some cases, for example if they sign a personal guarantee for a loan, trade wrongfully when the company is insolvent, or act fraudulently.

Who you need

• At least one director. A director must be a natural person aged 16 or over. Directors can live anywhere in the world and must verify their identity with Companies House.
• At least one shareholder. This can be an individual or another company, and they can be based anywhere in the world.
• People with significant control (PSCs). Anyone who holds more than 25% of the shares or votes, or otherwise controls the company, must be recorded. New PSCs must verify their identity too.
• A company secretary is optional for private companies.

What else you need to register

• A company name that is not the same as an existing name and does not use restricted words without permission.
• A registered office address – an "appropriate address" in the same UK nation where the company is registered (England and Wales, Scotland, or Northern Ireland). PO boxes are not allowed.
• A registered email address – used by Companies House to contact the company. It is not shown publicly.
• Articles of association – the company's rulebook. Most small companies use the model articles.
• Share capital – the number, class and value of the first shares. Many companies start with a small number of £1 ordinary shares.
• SIC code – a code that describes what the company does.

The Companies House incorporation fee is £100 online from 1 February 2026.

Ongoing responsibilities

Once formed, the company must:

1. Register for Corporation Tax with HMRC within 3 months of starting to trade.
2. File a confirmation statement at least once every 12 months (Companies House fee £50 online).
3. File its first accounts within 21 months of incorporation, then within 9 months of each year end.
4. File a Corporation Tax return and pay any tax.
5. Keep statutory registers, such as the register of members and the PSC register, up to date.
6. Tell Companies House about changes, such as new directors or a new registered office.

The company may also need to register for VAT and PAYE, depending on its turnover and whether it has employees.

Advantages

• Limited liability for shareholders.
• Can be more tax-efficient than a sole trader at some levels of profit, depending on your situation.
• Easy to bring in new owners by issuing or transferring shares.
• Can look more established to customers and suppliers.

Disadvantages

• More admin and annual filings than a sole trader.
• Some information, such as directors' names and accounts, is public.
• Money in the company belongs to the company, not to you personally.

Whether a limited company is right for you depends on your plans and finances. An accountant can help you compare options.

Other company types

• Company limited by guarantee: has members who guarantee a small amount instead of shareholders. Often used by not-for-profits and charities. See Company Limited by Guarantee.
• Public limited company (PLC): can offer shares to the public, needs at least two directors, a qualified company secretary and £50,000 allotted share capital.
• Limited liability partnership (LLP): for partnerships, with at least two designated members.

How Form My Company can help

Our Digital Package forms a private company limited by shares for £290, including the £100 Companies House fee, VAT, your certificate, articles, share certificates, registers and Corporation Tax registration. As a Companies House ACSP, we verify your identity for you as part of the order. Compare our packages to see what else each level adds.

Frequently asked questions