A Private Limited Company differs from a Public Limited Company in so far that it is generally set up by a few owners who also become the shareholders of the Company.  Note:  A Limited Company is referred to as a Company, whereas Sole-traders or Partnerships are defined as Businesses.

• The main difference is that a Private Limited Company is a legal entity in its own right and the owners become directors and/or shareholders. If the business should fail for any reason the shareholders are only liable for the amount of money that they have invested.  In other words they could lose that investment.  This rule only applies provided that no personal guarantees have been given and provided no illegal dealings have taken place.
• If it can be proved that a Director of a Private Limited Company has acted dishonestly and generally not discharged his or her duties correctly then they can be disqualified from being a Director of any other company for a certain length of time. If the misconduct is serious, legal action could result.
• A Private Limited Company is funded via money invested by its Shareholders.  In a start-up business this is very often the owner themselves who then become a major or perhaps sole shareholder.
• If your business idea requires a good deal of start up capital, a Private Limited Company will give protection should it fail, provided it is the Private Limited Company that has taken applied for and been awarded that loan capital.  Whilst there are more regulatory stages to go through, many people seriously consider a Private Limited Company because of this protection and also the personal tax advantages that can often be achieved.
• Annual Returns have to be filed with Companies house in Cardiff and these are there for anyone to examine if they want. They are said to be in the ‘public domain’. There are penalties for filing these returns after the due date.
• Directors of a Private Limited Company have a code of conduct to follow and minutes of meetings and resolutions have to be accurately recorded and filed.
• There is a standard registration fee with Companies House, however, the full costs will depend on whether you do this yourself or if you get a solicitor or accountant to do it for you.
• A private company limited by shares is the most common type of company.  The most important difference to the public limited company is with regard to the sale of its shares.  A private limited company cannot offer the sale of its shares to the public, where as a public limited company can.
• A Private Limited Company must have at least one director.
• The Companies Act 2006 which received Royal Assent on 8th November 2006, effectively replaced existing legislation relating to companies with the exception of the provisions in relation to investigations and community interest companies (CIC).  All parts of the Act will came into force October 2009; you will find further information on the Companies’ House web site. www.companieshouse.gov.uk
• A private limited company may or may not have share capital and there is no limit to the level of liability for its members.

Please Note:

• You cannot be a company director if you are an un-discharged bankrupt or you are disqualified from holding a directorship, unless the courts have given you permission.
• From 1st October 2008 the Companies Act prevents anyone form being a company director who is below the age of 16.
• There are also rules and regulations regarding the name of your company that need to be adhered to.  Again these can be investigated at the Companies House web site.