You can set up a private limited company to run your business. You must appoint people to run the company (called ‘directors’) and register (or ‘incorporate’) it with Companies House.

Once the company is registered you’ll get a ‘Certificate of Incorporation,’ this confirms the company legally exists and shows the company number and date of formation.

Sole traders are personally responsible for their business debts, but the liability in a private company is usually limited to the shareholders. The liability depends on the type of company being created.

A private company limited by shares means the members’ (shareholders) liability is limited to the original value of the shares issued but not paid for.

A private company limited by guarantee means the company members financially back the company up to a specific amount if things go wrong.