Do I really need a limited company and what does limited liability mean?
The majority of businesses are not companies. The reasons for having a company are varied, for example, it could involve ownership of property, obtaining investment funds, taxation or contractual relationships. Many businesses function satisfactorily as sole traders or partnerships.
The key point to recognise is that a company is a separate entity.
This means that it is a legal person in its own right.
It is separate from those who own or run it, and has 'limited liability'.
Limited liability gives the owners of the company (its shareholders) protection if the company fails.
This means that if a company is put into liquidation, the people who own the company will only be required to pay what they have already paid or agreed to pay towards settling its debts.
BACK TO COMPANY REGISTRATION GUIDANCE
Source:
http://www.companieshouse.gov.uk/about/gbhtml/gba1.shtml#one
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