Business owners choose the legal structure of their company, which can be a limited company or a non-limited company; in the form of a sole trader or a partnership. There are a number of different reasons why a business owner might choose one structure over another, and you can read about the different legal structures on the Government website here.
The two key differences are:
1. The legal status and liability between the two structures. In a non-limited company the business owner(s) and the company are legally the same entity – the owner(s) are the company and are therefore liable for all the debts, as well as receiving all of the profits. In a limited company, the company is a separate legal entity and therefore the owners’ liability is limited.
2. Public filings. A non-limited company does not have to file accounts or other returns with Companies House.