20 May 2025
Guide to Company Types in the UK: Advantages, Disadvantages, and Selection Criteria
Which type of company should you choose in England? Strengthen your decision with a comprehensive guide that compares structures like Sole Trader, Limited Company, LLP, and PLC.
Setting up a company in England offers significant opportunities for entrepreneurs looking to enter the global market. However, one of the most critical stages in this process is deciding on the structure of the company. The type of company chosen affects not only tax obligations but also your way of doing business, your liability for debts, and your reputation. Therefore, making the right choice can be crucial for both legal protection and commercial success. In this content, we will examine the types of companies in England in detail; we will explain the advantages, disadvantages, and suitability of each structure in a comparative manner.
What to Consider When Choosing a Company Type in England?
The main factors you should consider when determining your company type are as follows:
Level of Liability: If you do not want to be personally liable for the company's debts, limited liability structures should be preferred.
Tax Advantages: Different company types have different taxation regimes.
Ability to Attract Investors: Structures planning to grow can attract more investment with more corporate company types.
Bureaucratic Burden: Some structures require less documentation and procedures.
Reputation: If you will be doing international business, Ltd or PLC structures increase trust.
Major Company Types in England
Sole Trader
Definition: This structure is ideal for sole ventures, where the entrepreneur owns and is responsible for the entire business, making it the simplest form of business.
Advantages:
Quick and low-cost setup.
All profit belongs to the entrepreneur.
Taxation is done through personal income tax.
Disadvantages:
Unlimited personal liability.
Corporate reputation may be weak.
It is difficult to receive investment.
Who is it suitable for?
Freelancers, professionals providing individual services, small businesses.
Partnership
Definition: It is a jointly owned structure established and managed by two or more individuals.
Advantages:
Sharing of capital and skills among partners.
More resources and support.
Ease of setup.
Disadvantages:
All partners are jointly liable.
Risk of disagreement in profit sharing.
Agreement required for legal binding.
Who is it suitable for?
Small businesses wanting to establish a joint venture, family businesses, professionals offering similar services.
Limited Company (Ltd)
Definition: The company is viewed as a legal entity separate from its owners. Partners (shareholders) are only liable to the extent of their capital in the company.
Advantages:
Limited liability.
Lower corporate tax (advantageous compared to income tax).
The company's profit can be distributed as shares.
Provides brand reputation and a professional appearance.
Disadvantages:
More accounting and declaration obligations.
Financial information is public.
Management and decision-making are more formal.
Who is it suitable for?
E-commerce entrepreneurs, businesses planning to operate internationally, ventures planning to attract investment.
Limited Liability Partnership (LLP)
Definition: It is a model that combines the advantages of partnership structure with a company. Each partner has limited liability, and profit-loss distribution is flexible.
Advantages:
Limited liability + partnership flexibility.
Tax liabilities are passed on to the partners.
Offers a corporate structure.
Disadvantages:
Individual declaration obligations are high.
May not be accepted in some sectors.
Decision-making processes can be complex.
Who is it suitable for?
Groups providing professional services (lawyers, consultants, accountants), individuals wanting to partner for business.
Public Limited Company (PLC)
Definition: It is a publicly traded joint-stock company structure. Stocks can be traded on the stock exchange and require a minimum capital of £50,000.
Advantages:
High investment potential.
National and international prestige.
Possibility of selling shares via the stock exchange.
Disadvantages:
Setting up and managing is very complex.
Mandatory auditing, transparency, and reporting obligations are high.
Who is it suitable for?
Advanced, large capital structures, companies planning an IPO.
Which Company Type is Suitable for You?
Company Type | Liability | Tax Method | Ease of Setup | Investment Potential | Suitability |
|---|---|---|---|---|---|
Sole Trader | Unlimited | Income Tax | Very Easy | Low | Small businesses, freelance |
Partnership | Unlimited | Income Tax | Easy | Low-Medium | Joint ventures |
Ltd | Limited | Corporate Tax | Medium | Medium-High | Ideal for all businesses |
LLP | Limited | Partner based | Medium | Medium-High | Professional groups |
PLC | Limited | Corporate Tax | Difficult | Very High | Large companies |
Choose the Right Company Type with ORTAC
Understanding which company type is most suitable for your business depends not only on your current plans but also on your future growth strategy. ORTAC offers you the most appropriate structure according to your business goals and carries out all necessary processes on your behalf.
👉 To determine the most suitable company structure for your business in England and to start the process safely, contact us
PUBLISHES
