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Benefits & advantages of forming a company limited by guarantee online in the UK: setting up a company limited by guarantee is not a course of action that every businessperson would consider embarking upon. The essential nature of companies limited by guarantee is that the profits made by the organisation are retained within it, to be spent on specific purposes, for example charitable activities, or reinvested into the firm's operations. This is in stark contrast to for-profit companies, which instead distribute the profits to their members, and there are a number of big advantages in forming a guarantee company if the generation of revenue is not a key interest of the members.
The first and most immediate benefit of a non-profitable company is that the legal structure of these entities are designed to protect members from liabilities, should a company default on its debts. Non-profit businesses are companies limited by guarantee, rather than by shares as in many for profit corporations. This guarantee is set at the time of formation of the company limited by guarantee, commonly at the level of £1, allowing the non-for-profit organisations to run without the fear of personal liability should they default on debts.
This is of particular advantage to larger non-profit organisations. Some take the form of charities, and these may have significant balance sheets which could potentially lead to large liabilities in for profit firms. There are many other types of non-profit corporation that also benefit from relative personal indemnity in case of default, including sports organisations and community groups.
The United Kingdom legal structure of companies limited by guarantee is very sound. In fact, many local authorities insist on regional organisations being registered as a company limited by guarantee. Companies must have legally named directors, must have at least one member and can vary member types to allow for subscriptions, restricted rights members and other individual arrangements, according to the individual needs of the company.
UK companies limited by guarantee are also able to take out loans, as well as to issue debentures, community interest companies, or CICs, have a high level of flexibility which allows them to access funding, subject to a community interest test. Charitable incorporated organisations, or CIOs, have the added function of being registered with the Charities Commission rather than at Companies House, again allowing members of the organisation to be exposed to a limited level of liability (or, in some cases, none at all).