A limited company is a legally separate entity from the people who own it. The owners of a limited company are protected by limited liability and operating as a limited company can offer more operational flexibility, however there can be more of an administrative burden and cost to operating a limited company compared to a sole trader or partnership.
Many businesses start off as sole traders or as partnerships, but form a company for limited liability and flexibility as their business grows.
For businesses that make a profit, a limited company is generally a company ‘limited by shares’ as opposed to “not for profit” companies which are generally ‘limited by guarantee’.
The company will have separate finances from the personal finances of its owners and can keep any profits it makes after paying tax.
For a limited company you will need to register with Companies House.