Is a Limited Company a Private Company

If you are thinking about starting a business or reviewing your business structure, you might have come across terms like “limited company,” “private company,” or “public company.” These terms can be confusing, especially when they are used interchangeably. In the UK, a limited company is usually a private company, but there are a few distinctions worth understanding.

This article explains the difference between private and public companies, what “limited” means, and how this affects business owners and directors in the UK.

What is a limited company?

A limited company is a type of business structure that exists as a separate legal entity from its owners. This means the company can own assets, enter contracts and be held responsible for its debts and liabilities independently of the individuals who run it. The key feature is that the liability of shareholders is limited to the value of their shares or guarantees.

There are two main types of limited companies in the UK: private limited companies and public limited companies.

Private limited companies (Ltd)

Most limited companies in the UK are private. These are known as private limited companies, and they cannot offer their shares to the general public. Instead, the shares are owned by one or more individuals or corporate bodies. A private limited company is often used by small to medium-sized businesses, family-run firms and contractors.

Private companies are legally recognised by the Ltd or Limited suffix at the end of their name. For example, “Greenhill Consulting Ltd” indicates that the company is privately held.

You can set up a private limited company with just one director and one shareholder, who can be the same person. Profits belong to the company until they are distributed as dividends, and the company must follow reporting and tax rules set out by Companies House and HMRC.

Public limited companies (PLC)

A public limited company is a different kind of structure, usually for larger businesses that intend to raise capital by offering shares to the public. A PLC must have at least £50,000 in share capital and meet stricter regulatory and reporting requirements.

While a PLC is also a limited company, it is not considered private because its shares can be sold on a stock exchange. Companies such as Tesco PLC or Barclays PLC are examples of public companies.

If a company is not listed on a stock exchange but still meets the legal definition of a PLC, it can remain private in practice, but the structure is designed for access to public investment.

So, is a limited company a private company?

In most cases, yes. When people refer to a limited company in the UK, they usually mean a private limited company. This is the default structure for most entrepreneurs, small business owners and freelancers who choose to incorporate. It offers a balance of limited liability, tax efficiency and a clear business identity.

If you register a company on GOV.UK and select a standard company structure, you will be forming a private limited company unless you choose otherwise.

Advantages of a private limited company

A private limited company offers several benefits:

• Limited liability protection

• Clear separation between personal and business finances

• Greater credibility with customers, suppliers and lenders

• More tax planning opportunities, especially for growing businesses

• Easier to bring in shareholders or transfer ownership over time

However, it also brings legal responsibilities. You must file annual accounts, keep accurate records and pay Corporation Tax on profits. Directors have a duty to act in the company’s best interests and comply with UK company law.

Final thoughts

A limited company in the UK is usually a private company. The full term is “private limited company,” and it is the most common business structure for new companies. Unless your business intends to offer shares to the public or raise large amounts of investment, a private limited company is likely to meet your needs.

If you are unsure about which structure is right for your business, or whether a public company would be more suitable in the future, it is always worth speaking to an accountant or legal adviser. Choosing the right setup from the start makes it easier to grow, manage risk and stay compliant.