Setting up a Limited Company
What is a Limited Company ?
Limited Company is a separate legal entity and company owners are only responsible for the invested money in the company. It offers much more flexibility such as appointing or selling shares to interested parties, taking on an employee and somewhat it is also tax efficient in many ways.
How to set up a Limited Company | Setting up a Limited Company
Setting up your own Limited Company sounds daunting but at Total Tax Accountants we can make this easy for you. In order for you to set up a limited company you can go directly with Companies House website here and set it up yourself or use our services which covers assessment of your personal circumstances, tax planning and what more it is cheaper than a cup of coffee. In order for us to apply for your company registration please request a form by sending us an email on firstname.lastname@example.org
Advantages of Setting up a Limited Company.
Let’s talk about few advantages of running your business as a Limited Company instead of being Self-employed Sole trader.
Although self-employed sole trader is a popular way to start your business but there are significant advantages of trading through a Limited Company structure. Some of these are discussed as below:
- Tax Advantage
The most important factor of running a business through Limited Company structure is that you are likely to pay less personal tax compares to trading through sole trader route. Ltd company profits are subject to CT (Corporation tax) and this is 19% for tax year 2019/2020. However to make it even more lucrative Government has announced to reduce this CT tax to only 17% from next year. Most company owners withdraw an optimal salary from their company and rely on Dividends to further income. This method can reduce or eliminate the Nations Insurance Contributions (NIC) because your optimal salary can be just below the NIC threshold and there are no NI payable for Dividends.
- Separate Legal Entity
Limited Company is treated as separate legal entity from its shareholders/owners. Company’s assets, bank accounts, contracts and liabilities are separate from company owners. However this is not the case with business run by a sole trader as he/she is responsible for all tax and administrative part of the business.
- Most established business image
Very commonly to have a Limited Company gives your business more established and professional image. Sometimes larger companies prefer to trade with Limited Companies compared to sole traders only.
- Get more like minded people on board / Shareholders
Limited Company can have new shares issued to bring more shareholders on board or sell part of business by selling some of existing shares. You can easily sell or buy shares and transfer ownership to potential investors. This method can also be used to raise some funds by bringing new investors in the business but limit their profit share ratio by allocating shares accordingly.
Should the owner of the Limited Company wishes to retire it is much easier to transfer the business or sell part of the business through a Limited Company than a non-registered business legally i.e Sole trader.
At Total Tax Accountants we always work hard for you to take your business on next level of success. This involves impartial advice, friendly services, plain English accountancy and constant tax planning review. After all your success is our business.
Please get in touch with our expert here to register your Limited Company with Companies House.