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Jargon buster: What is a private limited company?

A private limited company is a business structure that has a separate legal identity from its owners, who are known as shareholders. These can be (but are not always) the company directors, employees, investors or other family members.

Private limited companies may be set up with only one director and one shareholder, who can be the same person – you.

This type of business is usually formed to limit personal financial risk. High earners may also trade in this way to reduce tax liability. Companies must be registered at Companies House, increasing the status and credibility of the business.

If you decide to set up a company as a sole director or with others, it is advisable to have an accountant. A shareholders’ agreement, which sets out roles and responsibilities, should be drawn up by a solicitor.

If you set up a limited company it is important to understand that, in contrast to being self-employed, where accounts remain private, some details of the company (including personal details of its shareholders and directors) will be available online for the public to inspect for a small fee.

There are other forms of companies such as public limited companies, companies limited by guarantee and community interest companies (CICs). For more information see the resources below.


Taken from A Pocket Business Guide for Artists and Designers, by Alison Branagan. A&C Black publishers, 2011.

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