What is a limited company and how do you start one?

337,000 new businesses were founded in the UK in 2022. If you’re thinking of joining those ranks yourself this year, here are some of the things you might want to know.

What is a limited company?

A limited company is a UK-based business organisation that is separate from its owners as an entity. Most limited companies are private, which means shares are only held privately, as opposed to public limited companies, whose shares are offered publicly for purchase.

Limited companies have “limited liability”, which means the company is responsible for itself and the owners are protected, to some extent, from certain liabilities. It is important to be aware that owners and shareholders are still personally liable in some circumstances, for example, if they provide a personal guarantee when taking out a business loan or in instances of fraud. 

👉 Register a limited company and get a business bank account. 

How do I start my own company?

It all starts with a name. Think of what you’d like to call your company, then check on Companies House to see if the name is available. If it’s not, keep thinking of names until you find one you like.

Next, you’ll want to register the company with Companies House and HMRC. There are two ways you can do this. Either apply directly with the government, or, you can use Tide. 

When you register your company with Tide, you can set up your business bank account at the same time. While Companies House charges £50 to set up your company, with Tide you can set up a limited company for only £14.99.

Once you’re set up, if you didn’t use Tide to start your business, you’ll probably want to create a business bank account that you can use to pay suppliers and take in income.

That’s it, you’re up and running. Time to start selling!

👉 Get started with Tide. 

Limited company vs sole trader: which is better?

That depends a lot on your goals. The tax and paperwork organisation can be a little more extensive with limited companies than for sole traders, however, it can be easier to gain access to business funding as an established company. A limited company is its own entity, separate from you, which means it can continue to exist and function beyond your retirement, whereas a sole trader business relies heavily on the person registered as the trader. So, if you’d like to pass your company down to a benefactor one day, registering as a limited company may be a good idea.  

👉 Compare sole trader loans. 

👉 Compare loans for new limited companies. 

How do I find and apply for business funding?

We can help there. We’re a broker, which means we help connect eligible businesses to suitable financing options. Via the Funding Option by Tide application form, you can apply for startup loans, the growth guarantee scheme, and other forms of funding designed for UK businesses.

👉 Find out how to finance a startup here. 

👉 Apply for the Growth Guarantee Scheme here. 

Apply for business finance with Funding Options by Tide

We help eligible businesses of all ages find and apply for finance. While applying for funding will likely have an impact on your business or personal credit score, checking if you’re eligible won’t. Just click the link below and submit your information to find out if you’re eligible to borrow between £1000 and £20M from one of the 120 lenders in our network.

Find business finance

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.