YBC Academy : Why Form a Limited Company
Forming a limited company limits your liability. This means that only the company itself is liable for any obligations and debts accrued.
Limited companies, generally speaking, have more credibility and are easier to sell.
There are 4 distinct parts to a company:
– Firstly the company which is a legal entity in its own right.
– The Directors who are responsible for the running of the business.
– The Shareholders who own shares in the company.
– The employees who work for the company.
Of course in practical terms you can be a director, shareholder and employee. All of these perform separate functions though.
Any property bought by the company is owned by the company and not by its directors or shareholders.
In terms of definition the directors run the company on behalf of the shareholders and ultimately can be removed by them. Shareholders own shares in the company but don’t run it.