When setting up a business, one of the first decisions is which company structure to use. Two common options are the limited liability company (LLC) in the United States and the private limited company (LTD) in the United Kingdom. This article explains both in plain language and is for general information only.
What is an LLC
An LLC is a business structure used in the United States. It is created under the law of a particular state and is designed to separate the business from its owners, who are usually called members.
LLCs are often chosen for their flexibility. The way an LLC is managed and taxed can depend on the state where it is formed and the choices its owners make.
What is an LTD
An LTD, short for private limited company, is a company structure used in the United Kingdom. It is registered with Companies House and is a separate legal entity from its owners, who are called shareholders.
An LTD is run by one or more directors and has to follow UK rules on company filings and accounts.
Key differences
The two structures come from different legal systems, so the rules on ownership, management, reporting and taxation are not the same. For example, an LLC has members while an LTD has shareholders and directors.
Where the business operates, where the owners live and how profits will be taken can all affect which structure is more suitable. Costs and ongoing paperwork also differ between the two.
Choosing the right structure
The right choice depends on your own circumstances, including your business plans, your location and your long-term goals. Think about where your customers and suppliers are and what administration you are ready to manage.
Because company law and tax rules can be complex and may change, please confirm the details with a qualified professional such as an accountant or solicitor before making a decision.
If you would like help understanding your options, contact True Trade Commerce to book a free consultation.