A private limited company is a legal entity in its own right, separate from those who own it, the shareholders. The limited liability, potential tax advantages, and simplicity of running a private limited company make this the most common form of registered business in the UK. As a shareholder of a private limited company, your personal possessions remain separate (unless they are secured against the business for borrowing), and your risk is reduced to only the money you have invested in the company and any shares you hold which you have not yet paid for. The minimum requirements for a limited company are detailed here.

In addition to limited liability this form of company is also considered to be more prestigious by other companies and the general public due to its legitimate nature and the way important information is recorded at Companies House. Anyone wishing to do business with your limited company can verify who is connected to the company and also the financial position of the company by paying Companies House a small fee. You may not consider this transparency to be a benefit to you personally but it is consider a huge advantage when doing business.