A limited company has the benefit of being able to enter into contracts in its own name and ss a separate legal entity from its owners, it means that all the company's liabilities are the responsibility of the company rather than the directors and shareholders.
The benefits should be viewed alongside the fact that the business and director details of a Limited Company are open to public scrutiny. Personal details of the directors and abbreviated accounts wil be openly available to the public via Companies House.
Choosing the right route for you
Making sure your business entity is right for your business is a key decision and we will guide you through this process, discussing your individual requirements and a risk assessment to ensure your business is set on the right path. Our advice will include considering your tax liability and make sure we consider the most beneficial route for you.
You have Limited liability – as your company is a separate legal entity, this can protect your personal assets from business creditors if the company finds itself in debt and has to cease trading. Business Status – from a trust perspecyive, the business appears more established and professional in its standing. Tax efficiency – Limited companies have the benefits of paying shareholders via dvidends which may be more tax efficient as they are taxed at a lower rate and do not attract National Insurance. Succession - In the event of a shareholder passing away or being unable to continue working, the succession process can be more straightforward.
The disadvantages: Running Costs – there are additional costs to consider when setting up a Limited company and also ongoing annual costs for preparing company accounts and tax returns which may be higher than those paid by self-employed individuals. Public Scrutiny - As a limited company, your business must file their accounts and shareholder details with Companies House, this information is openly available via their website.
Audit requirement – In certain circumstances, your business may be subject to an audit. This is an examination of the financial statements of a company, such as the income statement, cash flow statement, and balance sheet. Audits provide investors and regulators with confidence in the accuracy of a corporation's financial reporting. This can be a costly undertaking, however most small businesses are exempt from this, we will advise on this, should you need to have an audit.
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