Does a Company Name Need to Have Limited or Ltd?
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When incorporating a company in the UK, you must take restrictions and requirements into account when choosing a company name. All limited companies’ names must end with either ‘limited’ or ‘Ltd’ unless they qualify for exemption.
Below, we will outline restrictions on trading names, exemptions from including ‘limited’ or ‘Ltd’ in a company name, and why businesses use Ltd.
What is the difference between limited and Ltd?
There is no legal difference between limited or Ltd in a company name. Ltd is an abbreviation of the limited, a type of company structure in the UK and many other countries.
The ‘limited’ or ‘Ltd’ appears in company names to indicate that it is a public or a private limited company.
A limited company is a business structure that’s separate from its owners or directors. This means the company itself is responsible for its liabilities and offers protection to directors, owners, and shareholders in case of debts or insolvency.
You can either choose to end your company with ‘limited’ or ‘Ltd’ when registering your company with Companies House.
Can Ltd and limited be used interchangeably?
You can interchange ‘limited’ or ’ Ltd’ in most situations. Whichever form you choose during incorporation does not limit you to use either in your websites, marketing materials, or for day-to-day business use.
However, when filing documents with Companies House, you should use the exact registered name as it appears on your certificate of incorporation failure to which your filing may be rejected.
Can I use limited in my trading names?
While there is flexibility in choosing a business name, there are restrictions on what you can use. A trading name must not be the same as an existing trademark.
What is a trading name? A trading name is a name under which you operate your business. It is the same as a business name. The name might be different from your registered company name.
For example, PWC’s legal company name is PricewaterhouseCoopers International Limited, but its trade name is just PWC.
A trading name must not include the following words or abbreviations:
- · Limited
- · Ltd
- · Public Limited Company (PLC)
- · Limited Liability Partnership (LLC)
What companies are exempted from using ‘limited’ or ‘Ltd’ in their names?
A company can be exempted from using ‘limited’ or ‘Ltd’ from their names if:
will only be exempt from this rule if it is limited by guarantee with articles of association that state the company:
- · The company is a registered charity.
- · Cannot pay its shareholders through dividends
- · Promotes or regulates commerce, education, science, art, and religion
- · Requires each shareholder to contribute to company assets within a year of them stopping being a shareholder.
- · Must spend its income on promoting its objects
If your registered company wants to remove the word ‘limited’ in its name, you must pass a resolution signed by all of the Directors of the company. A copy of the resolution should be lodged with Companies House along with Form NE01.
Icon Offices offers a company name change service that takes care of everything from the drafting of the resolution to filing it with Companies House and completing all of the necessary paperwork for only £27.99 inclusive of Companies House fee.
Why do businesses use ‘Ltd’ or ‘limited’?
Limited liability
Running your business in a limited company will offer limited liability protection to directors and shareholders. Their assets are separate from the company’s finances in case of debts or insolvency.
Shareholders have no legal obligations to pay more than the nominal value of the shares they hold.
Professionalism
Limited companies are perceived as more reputable and stable in the eyes of clients, suppliers, partners, and investors enhancing credibility and the professional level of their business.
Tax benefits
A limited company benefits from tax efficiency. Corporation tax rates are often lower than personal income tax rates. Limited companies pay corporation tax on their profits, however, there is a small profit rate for companies with a profit of £50,000 or less.
Limited companies can claim expenses such as salaries, rent, and utilities as tax-deductible resulting in significant savings for the company.
Separate legal entity
A limited company exists independently from its owners. Its finances are different from those of the owner ensuring clear financial management and accounting.
Remember, a company name must have a ‘limited’ or ‘Ltd’ in its name. You can use either in your company name since they are the same.
You can use ‘limited’ and ‘Ltd’ interchangeably no matter the one you used to incorporate your company with Companies House. However, when complying with Companies House legal requirements, you must use the exact name in your incorporation certificate.
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