A limited company is a separate legal identity from its directors, shareholders and employees. Therefore, a limited company has its own assets, liabilities which are separate from it’s owners. This is obviously a significant difference from the situation of a sole trader or partnership, where the firm’s assets and liabilities are that of it’s owners. This legal distinction between a company and it’s members (shareholders) is sometimes called the “veil of incorporation”.
Think of a limited company as a virtual person. A limited company can sue or be sued, it can even be a director of another company.
A privately owned limited company normally has ltd or limited after it’s name, whereas a company, who’s shares are quoted on the stock exchange is a plc (public limited company).