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British Law >> Organisation Area >> Formation

Starting a Business - Formation

Formation of a business, whether commercial or a community business, requires careful consideration of the type of organisation to be formed.

There are two main types of commercial company. A company limited by shares, or a company limited by guarantee.

A company limited by shares - is the most common type of limited company. This form is commonly used for small business, and shares are issued as a basis for defining profit sharing.

A company limited by guarantee - is the form used for non-profit organisations such as clubs, associations, community organisations. There are no shares and any profits are not distributed to members.

Standard forms can be used for either of these startups.

An alternative is a partnership (see at left) where the structure is more closed and so is limited to the agreeing parties and not to the holders of shares.

Companies House provide a free information service on the incorporation of different types of companies.

Company Law Club is a free service of the Incorporation Services Limited, Company Registration Agents and Company Secretarial Consultants.