There are four distinct types of limited company formations:

1. Private Company Limited by Shares: This type involves a share capital, and each member's liability is limited to the unpaid amount on their shares. Shares cannot be publicly offered.
2. Private Company Limited by Guarantee: In this formation, members don't contribute to the capital through share purchases. Liability is limited to the predetermined contribution each member agrees to make if the company is liquidated.
3. Private Unlimited Company: This company may or may not have a share capital, and there's no limit to members' liability. It discloses less information due to the absence of liability limitations.
4. Public Limited Company: With a share capital, the liability of each member is limited to the unpaid amount on their shares. Public limited companies can offer shares to the public and may be listed on the stock exchange.

The term "limited" refers to limited liability, and there are approximately 1.5 million such companies in the UK. Unlike sole traders or partners, owners of a limited company are personally liable only for the invested amount.

One primary advantage of company formation is the limited liability it provides to shareholders. Shareholders and directors are generally not personally liable for the corporation's debts. This protects personal assets from being used to settle corporate obligations. Adherence to governance rules, such as holding annual meetings and maintaining minutes, is crucial to maintaining limited liability.

To operate as a private limited company, follow these steps:

1. Choose a new company name adhering to guidelines.
2. Provide a UK address for the company.
3. Appoint officers and shareholders for the company.
4. Utilise our Online Company Formation Service for completion.

The registration process involves a Memorandum of Association, outlining the company's name, registered office, objects of the company, officers, and share capital. Compliance with these regulations ensures limited liability for member shareholders.