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Limited by Shares Companies

The most common company structure in the UK, typically used for businesses that aim to make a profit

Why it’s commonly used:

  • Shareholders have limited liability, meaning they are only responsible for the amount they invested in shares. Personal assets such as homes or savings are protected if the company cannot pay its debts.
  • The company is a separate legal entity, which means it can enter contracts, own property, incur debts, and be held liable in its own right - independent of its owners.
  • Tax efficiency - owners can pay themselves through a combination of low salary and dividends, with dividends taxed at a lower rate than income tax and not subject to National Insurance contributions, meaning the overall tax burden is typically lower than that of a sole trader.
  • Seen as more credible to business partners and customers than a sole trader structure.
  • Allows the company to exist indefinitely - after an original owner retires or dies, making it ideal for family businesses or companies looking to operate for generations.

💡 Best suited for: Entrepreneurs, startups, one and two-person businesses, family businesses, and established companies that want to scale, and raise investment.