---
title: "Private Limited Companies (PLCs)"
slug: "private-limited-companies-plcs"
tags: ["Taxes", "independentcontractor"]
updated: 2022-10-11T13:51:29Z
published: 2022-10-11T13:51:29Z
canonical: "resourceportal.antientropy.org/private-limited-companies-plcs"
---

> ## Documentation Index
> Fetch the complete documentation index at: https://resourceportal.antientropy.org/llms.txt
> Use this file to discover all available pages before exploring further.

# Private Limited Companies (PLCs)

Private Limited Companies (PLCs) are businesses that are legally separated from their owners, and therefore have separate finances, unlike [a sole trader](/v1/docs/sole-trader). PLCs are seen as more professional and credible than sole traders and are preferred by financial institutions for business accounts and transactions.

**There are two types of PLCs:**

- Limited by shares
- Limited by guarantees (non-profit organizations)

### Requirements to set up a PLC:

- Minimum of one director and one member, which can be the same person
- Member must be at least 16 years old
- Not a disqualified director or undischarged bankruptcy

You can apply through a company formation agent, which takes about 3 to 6 working hours. You can find a list of formation and company secretarial agents [here](https://www.gov.uk/government/publications/formation-and-company-secretarial-agents/company-formation-agents-and-secretarial-agents).

### How to Register your PLC and Needed Documentation

### 

**1.** Chose an official name

- It needs to end with ‘ltd’ or ‘Limited’
- It’s recommended that you do not use your name as HMRC may flag you as an employee under the [IR35 legislation](https://www.gov.uk/guidance/understanding-off-payroll-working-ir35).

---

**2.** Registered office address

---

**3.** [Standard industrial classification of economic activities (SIC)](https://www.gov.uk/government/publications/standard-industrial-classification-of-economic-activities-sic) - The SIC code defines your business’ activities/operations

---

**4.** Memorandum of association and [articles of association](https://www.gov.uk/guidance/model-articles-of-association-for-limited-companies)

---

**5.** Registration with the [Companies House](https://www.tax.service.gov.uk/register-your-company/setting-up-new-limited-company?_ga=2.219767772.458173448.1658453446-671054591.1654181727) and [HMRC](https://www.gov.uk/limited-company-formation/set-up-your-company-for-corporation-tax?step-by-step-nav=37e4c035-b25c-4289-b85c-c6d36d11a763) for corporation tax

---

### PLC Business Requirements

- File annual accounts and an annual confirmation statement with Companies House
- Submit a company tax return to HMRC
  - As the director of your PLC, you need to file a Self Assessment tax return in your personal capacity as well.
  - If you get your salary from your own PLC, then you need to do it through the [PAYE](/v1/docs/pay-as-you-earn-paye) system (for taxes and NIC payments)
- Pay corporation tax
- Keep detailed financial records of your business - (profits, losses, expenses)

**PLC Advantages:**

- Because company finances are separate from personal assets, there’s limited liability in case of business losses or failure. The company operates as a separate legal entity as its owner/director/employees.
- PLCs are seen as more professional and credible than sole traders.
- Having a PLC is more tax efficient. For instance, limited companies pay 19% corporation tax on profits, compared to 20-45% income tax for sole traders. PLCs can also claim tax-deductible costs and allowances.
- Lower income tax and NIC contributions if you pay yourself through a combination of salary and dividends.

**PLC Disadvantages:**

- Your personal information is publicly listed on the Companies House website when you set up your own PLC (Name, official address, birthday, telephone number).
- It can get confusing to do accounting for your business, which is why it’s recommended that you hire a CPA for advice and/or assistance.

## Related

- [Who is an Independent Contractor? (UK)](/who-is-an-independent-contractor-uk.md)