A company has a separate legal identity to its directors and shareholders. It has its own legal personality. It has directors, who run the company, and shareholders, who own the company. These may or may not be the same people.
Any profit the business makes is owned by the company, after it pays Corporation Tax. The company can then share its profits.
Advantages
Limited liability gives you protection if the company gets into financial difficulty. Liability is limited to the nominal value of your shareholding, which can be as little as £1.
Limited companies operate a tax-efficient business structure where Corporation Tax is paid and, by paying a combination of salary and dividends, directors can minimise personal tax and National Insurance Contributions.
A professional and corporate image is created by a limited company.
Disadvantages
It can be more costly than setting up as a sole trader.
Accounting and administration can be more complex.
Withdrawal of money may be difficult.
