Forming a company is a legal process that must be undertaken so that the business can trade with another. In America company formation is known as company incorporation. The legal implication of this is that the company becomes recognised under law. The actual legal definition means that the company can then be recognised as an individual under law.

This means that it is liable to the laws that individuals face and as a result can allow the company to trade. The process of incorporating a company can be applied to many different types of organisations including businesses and also including governing bodies, sports clubs and not for profit organisations.

The UK process that ends in the organisation becoming a registered company can be completed in two ways. It is possible to register to become a company either electronically or in a paper version. Getting registered in the UK is extremely quick and easy and it is recognised as one of the quickest place to get registered as a company. There are a number of examples in which companies have been set up in 5 minutes. This is via the electronic process that has made incorporating a company simple.

The type of company that is set up can differ greatly. There are many different types of company that one is able to set up in the United Kingdom. Some of the different types of company that can be set up this way are as follows. It is possible to set up a Public Limited Company, Private Limited Company, an unlimited company, a limited liability partnership, a company limited by guarantee, a royal charter, community interest company and a societas europaea.

Knowing which type of company to set up can be difficult. Knowing the fundamental differences between the different types of company can help the uninitiated understand which type of company might suit them. Details of the more common types of company that can be formed are as follows.

Private limited company

A company that is limited by shares is known as a private limited company. These operate in the following way. Shareholders own a share in a company and the amount of money that these shareholders are liable for is limited to the amount of money that they initially invest in the company. If the private limited company was to suffer insolvency the shareholders would therefore only have to give up the money to the value that they had originally invested.

Private limited companies can be either public or private and this means that many private limited companies are floated on the stock exchange. Share holders are liable to the cost of their investment and no more. This is one of the most popular types of company.

Unlimited company

Unlimited companies have a legal process in which the members of the company are liable for all costs if the firm was forced into compulsory liquidation. The members of these companies are liable for the debts that a company might incur and these become personal debts. This can be an unpopular option for many people as it means that their personal assets are at stake if the company was to suffer. The process of setting up an unlimited company costs around 250 pounds.