What is a private limited company? Types and fees (2026)

A private limited company is one of the most popular business structures in the UK, offering limited liability protection, a professional image, and separation from personal finances.

Here we explain what a limited company is, its key features, the main types, and how to register one.

What does “private limited company” mean?

You will commonly see a private limited company described as:

• Private limited company
• Ltd company
• Private company limited by shares or guarantee

A limited company is one of the main ways to run a business in the UK, alongside operating as a sole trader (self-employed).

Key features

• The term ‘limited’ refers to the limited liability enjoyed by the company’s members. Their personal assets are normally separate from the company’s debts, although there are important exceptions.
• A private limited company is a separate legal entity from its owners, unlike a sole trader.
• The ‘Articles of Association‘ act as a rule book for a company. Most new companies use template ‘model’ articles, although you can create tailored articles depending on the requirements of the business.
• All companies have a number of statutory and financial obligations which must be carried out by their directors.
• Once a company name has been registered, Companies House will not normally register another company with the same name. This is not the same as trade mark protection, and separate rules apply to trading names.
• Find out more about limited company advantages and disadvantages.
• Private limited companies are registered at Companies House, the UK’s registrar of companies.
• Companies and directors must comply with the provisions of the Companies Act 2006.

Limited by shares or limited by guarantee?

There are two main types of private limited companies:

1. Limited by shares

• The most popular type of private limited company.
• Used by businesses that intend to make a profit.
• Shareholders’ liability is limited to the amount, if any, unpaid on their shares.
• Has shares and shareholders.
• Pays Corporation Tax on taxable profits.
• Must have at least one director.

2. Limited by guarantee

• Often used by not-for-profit organisations, such as charities, organisations and clubs.
• Has members, known as guarantors, rather than shareholders.
• Each guarantor agrees to contribute a fixed amount if the company cannot pay its debts. This is often just £1 and is set out in the company’s statement of guarantee.
• Profits are often retained or reinvested to further the organisation’s aims rather than distributed to members.
• Must have at least one director.
• Read our guide to guarantee companies.

Is a private limited company right for you?

Before you go ahead, there are a number of steps you need to follow:

1. Do you have a viable business idea?
2. Is the limited company the best business structure for you?
3. Will your company be limited by shares or guarantee?
4. Is your company name available?
5. Have you chosen the company directors and, where relevant, shareholders or guarantors?
6. What will your share capital look like?
7. Are there any people with significant control (PSCs) over the company?
8. Do you need custom Articles of Association?
9. Are you aware of your obligations as a director?
10. How are you going to register your company? Direct or via a third party?

How do you register a private limited company?

It is very easy to incorporate.

You can register directly via Companies House or use a formation agent/third party, often for a similar cost with added convenience.

Since 18 November 2025, anyone becoming a new company director must also verify their identity for Companies House and provide their personal code as part of the incorporation process. PSCs are also subject to identity verification requirements. See the official Companies House identity verification guidance.

Read our key guide to setting up a limited company, which covers all of the practicalities and what information you need to gather before starting the registration process.