The most important difference between a private limited company and a public limited company is that a public one may offer its shares to the public, whereas a private company doesn't.
Many small businesses operate as a private limited company. There are around 1.15 million private limited companies operating in the UK at the moment. First of all, a private limited company is owned by its shareholders. Your company and personal finances are kept separate under the limited company business structure. Limited companies are also subject to corporation tax on their profits.
And, if your company is going to turnover £73,000 a year (as of 1st April 2011, previously it was £70,000), then your company must register for value added tax (VAT). Unlike public limited companies, the shares of a private limited company are not traded on the stock exchange. This can restrict the availability of the company's finance, especially if they are looking to expand.
A public limited company is able to offer its shares to the public by trading on the Stock Exchange, meaning that the shares can be bought by general members of the public. This is the main difference between a public limited company and a private limited company however, public limited companies do not have to offer its shares to the public. A public limited company must have at least £50,000 worth of its shares issued in order for them to carry on the business. The money to fund these companies is provided by the government in the taxes that the public have to pay.
Other differences include that public limited companies are owned by the government, whereas private limited companies are private, of course. A private limited company is limited to fifty members but it must have no less than two and public limited company must have a minimum of seven shareholders, there is no maximum number.