Limited

Companies

A Limited Company is a separate legal entity, and if you are serious about starting and growing a business, a limited company is the vehicle to use.

There are many advantages to operating as limited company with perhaps the most important of these being tax efficiency. It must be remembered that although there are tax advantages, there is more compliance work and ‘red tape’ with a limited company when compared to operating as a sole trader.

 

It is crucial that you discuss your options with us prior to starting your business to get things right from the outset.

 

We have experience acting for many limited companies having advised from incorporation right through to the hugely successful businesses they are today.

 

Our limited company service includes preparation of Statutory Accounts, preparation of Corporation Tax Return, filing of Annual Returns and advice on tax mitigation strategies.

 

So what are the pros and cons of incorporating your business?

 

Advantages:

 

  • Limited liability – a limited company is a separate legal entity. This can protect your personal assets from business creditors if for any reason the company gets into trouble. Operating as a limited company can be especially useful if there are significant risks associated with your business activity.

 

  • Status & perception – a limited company is the ‘gold standard’ business entity in the United Kingdom. Unlike other EU countries there are very few barriers to setting up a limited company. As a limited company a business automatically looks bigger and more professional.

 

  • Shareholder succession is more straightforward than other business entities.

 

  • Tax efficiency – this is the major advantage. Trading as a limited company can be more tax efficient due to clever remuneration strategies that can be implemented

Disadvantages:

 

  • Costs – the professional costs for setting up a limited company are not much more than registering an individual as self-employed, but the costs for preparing company accounts and tax returns can be significantly higher. There are also additional costs involved with various Companies House requirements.

 

  • Companies must file their accounts and various other documents with Companies House, so documents are available to be seen by the general public.

 

  • One might make losses in the first few years of trading when setting up a business. Losses in a limited company are restricted to use by the limited company only (as it’s a separate legal entity), whereas losses when self-employed can be utilised personally. This is especially useful if you are starting a business whilst still employed.

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