Within the UK, you’re spoilt for selection in relation to the various ways you possibly can arrange a business. Understanding the structures available to you is a crucial part of beginning a latest enterprise.
But with terms corresponding to sole traders, firms, limited, unlimited, private, and public, it’s easy to get overwhelmed.
To assist, on this post we’re going to focus on probably the most common business structure questions: what’s the difference between private and public limited firms? Let’s start.
The important thing difference between private and public limited firms
Probably the most appropriate place to start out is to take a look at why they’re called ‘private’ and ‘public’ firms. And that is all to do with how shares in the businesses are sold.
Shares in a personal company can only be moved around in a personal capability, via a personal sale. This doesn’t mean that the selling of shares is necessarily done in secret. What it does mean is that shares can’t be put up for public consumption through the stock exchange.
A public company, alternatively can do exactly that – put company shares up on the market via the stock exchange (once it has jumped through some hoops, which we’ll touch on shortly).
So for this reason they’re called private and public limited firms.
Being a personal limited company doesn’t mean that you simply wouldn’t have to reveal information on the general public register at Firms House. It is a necessity for each business structures. Nonetheless, public firms need to disclose more information in comparison with their private counterparts.
Now let’s explore what else sets the 2 structures apart:
Minimum share capital
A non-public company limited by shares has a minimum share capital of 1 share value £1, and may start trading as soon because it has been registered at Firms House (so sometimes on the identical day that the appliance was sent).
Public firms cannot trade until they’ve allotted a minimum of £50,000 value of shares, with at the least one quarter of this being paid up (so a minimum of £12,500). The corporate will need to have a trading certificate – provided by Firms House – to prove this. Trading certificates are typically issued inside two weeks of the appliance being received.
Officers of a public company may be fined if the corporate trades (or borrows) with no valid trading certificate.
Annual account due dates and late filing penalties
Private firms must file their annual accounts inside nine months of their accounting reference date passing. For instance, a personal company formed on 1 August 2022 would have an accounting reference date of 31 August 2023. The primary set of accounts should then be delivered no later than 01/05/2024.
Public firms have a little bit less time, with theirs being due inside six months of the accounting reference date going by. For instance, a public company formed on 1 August 2022 would again have an accounting reference date of 31/08/2023. The primary set of accounts should then be delivered no later than 01/02/2024.
Whilst each structures incur a penalty for late filing of annual accounts, the penalty is heavier for public firms:
|How late?||Private Company||Public Company|
|Lower than 1 month||£150||£750|
|Greater than 1 month, lower than 3 months||£375||£1,500|
|Greater than 3 months, lower than 6 months||£750||£3,000|
|Greater than 6 months||£1,500||£7,500|
The people in the corporate
Private firms (limited by shares) may be formed with only one person acting as the only real director and shareholder.
Whilst a personal company can appoint a secretary if the administrators wish, this has not been a compulsory requirement since 2008. If a personal company does decide to appoint a secretary, this person requires no formal qualification.
Public firms require at the least three people, with a minimum of two directors and one suitably qualified secretary (an accountant for instance). Any of those people will also be a shareholder.
Annual general meetings (AGMs)
An annual general meeting is a gathering between the entire company’s shareholders through which different elements of the corporate are discussed. Generally, the meeting will involve looking back over the corporate’s activity within the last yr, developing a method for the subsequent yr, and, importantly, voting on particular issues.
Private firms don’t have any obligation to carry annual general meetings. Nonetheless, they’ll in the event that they want to.
A public limited company must hold an annual general meeting inside 6 months of the accounting reference date having passed and must proceed to accomplish that for the lifetime of the corporate.
Private company names must end with ‘Limited’ or ‘Ltd’, or the Welsh equivalents – ‘Cyfyngedig’ or ‘Cyf’ (some limited by guarantee firms don’t need to include the suffix in the event that they meet very specific criteria).
Public firms must add ‘Public Limited Company’ or ‘PLC’ at the top of their name.
But despite their differences, the corporate formation process is analogous
Whatever the structure that you simply decide to push ahead with, we will help register your organization with Firms House.
For each a personal limited company and a public limited company, our online process may be broken down into 4 easy steps:
1. Select your organization name
Our company name search tool can inform you immediately in case your name is out there or not, and if it includes any sensitive words or expressions that can require supporting documentation. If it does, we’ll be blissful to help you with this.
2. Pick your organization formation package
We provide quite a lot of packages dedicated to the private structure, including the Digital, Privacy, Skilled, Prestige, All Inclusive, Non-Residents, Limited by Guarantee, and eSeller packages. Prices start at just £12.99.
In the event you want to form a public limited company, take a take a look at our PLC Package, available for £119.99.
When making payment, you furthermore mght have the choice to buy some handy extras, including the Pre-Submission Review (£4.99), whereby considered one of our company experts will review your application before it’s sent to Firms House, to make sure it doesn’t include any mistakes. Pick up any extras that you simply want, enter your account information, after which make payment.
4. Provide the corporate details
Our company formation process takes you thru the appliance within the easiest method, ensuring that you simply provide the needed company, director, secretary (for a PLC), and shareholder information.
If any information is missing, we’ll highlight this and stop you from proceeding until the knowledge has been entered. For instance, if you happen to are forming a PLC and also you only enter the small print for one director, we’ll remind you that that you must appoint two.
Once your application is complete, we’ll send it digitally to Firms House, who will typically accept it in 3 – 6 working hours. Once your organization has been formed, we’ll email all the corporate documents to you, including the certificate of incorporation, share certificates, and memorandum and articles of association. Some packages also include printed documentation, through which case these will probably be mailed to you.
If forming a public limited company, we’ll also send you the trading certificate.
So there you might have it, the difference between private and public limited firms
We hope you might have found this post helpful.
Please leave a comment if you might have any questions on private firms, public firms, or our company formation process, and we’ll be greater than blissful to assist.