Difference between limited and ltd

What is the difference between Limited and Ltd?

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There is no difference between Limited and Ltd. in a company’s name. Both company endings mean that a company is limited by shares. For example you can call your company The Best Company in the World Ltd. or The Best Company in the World Limited. Limited companies have a number of benefits. You can read our blog on potential benefits of a limited company.

What is a company limited by shares?

A company limited by shares is a type of a private limited company that is formed under the laws of England & Wales, Scotland & Northern Ireland. Private limited company’s shares may not be offered to the general public. A private limited company has shareholders whose liability is limited by shares. 

Who are the company’s officers?

Every UK company must have company officers, called Directors. A company must have at least one Director.  The company appoints Director(s) to ensure its proper operation and compliance with relevant laws and regulations. Until 2008 every UK limited company was also required to have a company secretary.  Company Directors have very specific duties. These duties are outlined in Chapter 2 of the 2006 Companies Act.

What is share capital?

Share capital is the amount of money that a company receives from shareholders in consideration for the company’s shares. The way to create a company is to form a company (for example using the MachFast.com app). A new company must issue at least one or more shares to at least one subscriber (or shareholder). Shareholders are called subscribers when they subscribe or buy shares in the company. MachFast.com app automatically creates 100 shares per shareholder (or subscriber). You can create as many shares as you would like when starting a company. 

What is the nominal value of a share?

A nominal value of the share is the price that a subscriber must pay when the new share is issued to them at the foundation of the company. Nominal values can be 1p or £10 or any other number. Ideally, you need to open a current account for the company as soon as the company is formed and pay the company as soon as possible the total price for the shares (when the company is formed, the total price= nominal value x number of shares). 

The initial share capital of the company is the total number of issued shares times the nominal price per share. 

What is a share premium?

A share premium is the difference between the price you sell your shares for and the nominal value of the shares (usually measured on a per-share basis). As your company grows, you may want to sell your shares at a higher price than the nominal value you paid. For example, if the nominal value per share is £1 and you sell your shares at £10 per share, the share premium will be £9.

What are company accounts?

Company accounts are financial statements that your company must file with Companies House and attach to your HMRC tax returns. Company accounts summarise your profit & loss as well as the company’s assets. 2006 Companies Act, Chapter 10 describes the legal responsibility to file company accounts.

Your company’s first company accounts start on the day of incorporation. By default, your accounting year runs for 12 months from the day of incorporation. However, you can alter your financial year-end. You need to send Form 225 to Companies House or change it on-line. Please talk to accountants on how to do this properly.

Please remember that your company must file accounts on-time, otherwise, there is a  £150 late payment fee. The fee may rise to  £1,500 if you are not careful.

The company’s first accounts must be delivered within 9 months of the end of the first accounting year (also known as the end of the accounting reference period) or if you shifted the financial year-end to cover more than 12 months, then within 22 months of the date of incorporation or three months from the end of the accounting reference period, whichever is the longest.


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