A limited company is a separate legal entity from its owners. The liability of the shareholders for the company's debt is limited to their investment (hence the name.) This protection from liability is one of the major advantages of using a limited company as a contractor in the increasingly litigious games industry.
Each year a limited company must:
- provide its shareholders with its financial accounts
- file a return with Companies House
- file its accounts with Companies House
- calculate and pay corporation tax to HMRC (more frequently for larger companies)
- file its accounts with HMRC
- run a PAYE system for its employees
- file an employer's return with HMRC
The director is responsible for the above and also submitting an annual self-assessment tax return to HMRC.