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Companies limited by guarantee differ from other limited company formations in that they do not issue shares to their members, but instead require each member to pay a nominal amount in case the company is dissolved.

Also called a guarantee company, this type of legal structure is used mainly by non-profit organizations like private clubs, community centers, registered charities, student unions, workers co-operatives and sports associations. Although it is commonly believed that guarantee companies cannot distribute profits to its members, this is actually not true. The distribution of profits can be allowed if the appropriate clauses are included in the Memorandum & Articles of Association, although doing so renders the company ineligible for charitable status under the UK Charities Act.

If you are planning to form a new limited company, you need to consider a number of important issues. Getting them right at the beginning will save you time and trouble, and potentially money, later on.

Company formation, also referred to as company registration, is the process of recognizing a company as a corporation, meaning that it takes on its own legal status that is separate from that of the people who own the business. Most often the chosen structure for a non-profit company formation is a company limited by guarantee. This is due to the fact that it has no shareholders and therefore, by its very essence, can easily be designed with charitable objects in mind.

There are numerous options open to those wishing to carry out a non-profit company formation for company limited by guarantee. These include forming a charity, setting up a co-operative, a trust or a community interest company or starting a company limited by guarantee. A registered UK company is an officially permitted entity with a separate individuality from those who own or control it. The majority of the corporations are limited liability companies which signify that the liability of the members is limited by guarantee or shares.
Company formation is a difficult process and needs hard work and commitment. It is a good idea to hire a professional. As I have stated above that there are lots of companies available online which can help you a lot in your registration process. First you need to determine if you are going to create a limited liability company or a corporation for your business entity. Each state has a different form for each of those types. Second, within each type, you can form a regular legal entity or a professional entity.
Professional limited liability corporations are limited to those running a professional licensed business such as a law firm, medical practice, engineering, accountant or architect business. In the corporation process in order to form a company limited by guarantee, there are also nonprofit corporations and each state usually has a specific form for these kind of organizations. Often, they are considered non-stock corporations. Not only will you benefit from all these incentives, but giving your charity a recognized legal structure affords you advantages like being allowed to create employment contracts; the ability to purchase long-term assets like land, buildings or property; having a formalized way of acquiring services or products from other companies; and the ability to enter into legally binding contracts with fund-raisers.
There are rules that have been placed as a safeguard for any third parties that may be negatively affected by a company's dissolution. Every creditor has to be notified well in advance before applying to dissolve a company, as they have the legal right to object to the company being struck off. All formalities like closing the company’s bank account, or the transfer of domain names should be dealt with before the directors apply for dissolution. In addition to notifying creditors, it is recommended to notify any other organization that may have an interest in the company's affairs.