Types of UK Companies Explained

Overview comparison

Sole trader

The simplest business structure. You and the business are legally the same entity. Registration is free through HMRC, there is minimal paperwork, and you file a single Self Assessment tax return each year. The downside is unlimited personal liability — if the business owes money, your personal assets (including your home) can be pursued.

For a detailed comparison with Ltd, read our Ltd vs Sole Trader guide.

Private limited company (Ltd)

By far the most common business structure in the UK, with over 4 million active on the Companies House register. A private limited company is a separate legal entity from its directors and shareholders. Key features:

• Limited liability — shareholders' liability is limited to their investment.
• Tax efficiency — pay Corporation Tax on profits and extract money through salary and dividends.
• Shares — ownership is divided into shares, making it easy to bring in investors or co-founders.
• Credibility — the "Ltd" suffix signals an established business.

Registration costs £12 at Companies House. Read our step-by-step guide to starting a company.

Limited liability partnership (LLP)

An LLP combines the flexibility of a partnership with limited liability. Each partner (called a "member") is taxed individually (like a sole trader), but personal assets are protected from business debts. LLPs are popular with:

• Accountancy firms
• Law firms
• Consultancy partnerships
• Property investment partnerships

An LLP must have at least two designated members who take on additional responsibilities (similar to company directors). LLPs file annual accounts with Companies House and each member files their own Self Assessment.

Public limited company (PLC)

PLCs can sell shares to the public and are listed on stock exchanges. Requirements include a minimum share capital of £50,000 (with at least 25% paid up), at least two directors and a company secretary. PLCs face much stricter reporting requirements and corporate governance rules.

Most small businesses will never need to be a PLC. It only makes sense if you plan to raise capital by selling shares publicly or want the prestige associated with PLC status.

Community interest company (CIC)

CICs are designed for social enterprises — businesses that trade for the benefit of the community rather than purely for private profit. They have an "asset lock" that prevents profits and assets from being distributed to owners except as reasonable salaries and limited dividends.

CICs must pass a "community interest test" and file an annual CIC report demonstrating their social impact. Registration goes through Companies House with an additional application to the CIC Regulator.

Company limited by guarantee

Instead of shares, members guarantee a nominal amount (typically £1) if the company is wound up. This structure is used by charities, membership organisations, sports clubs and non-profits. There are no shareholders and no dividends — any surplus is reinvested in the organisation.

Ordinary partnership

The simplest multi-person structure. Two or more people share responsibility for the business, its debts, and its profits. There is no limited liability — each partner is personally liable for all debts, even those incurred by other partners. Partnerships do not register with Companies House but must register with HMRC.

Which should you choose?

• Working alone, low risk, under £30k profit? → Sole trader
• Working alone or with co-founders, want liability protection? → Private Ltd
• Professional partnership (lawyers, accountants)? → LLP
• Social enterprise? → CIC
• Club, charity or membership body? → Company limited by guarantee
• Planning to sell shares publicly? → PLC (with professional advice)

You can search any company on BizLookup to see its type, registration date and current status.