- Posts: 0
What are the advantages of setting up a private limited company? I’ve posted this in the Legal section, hope that’s right!
Currently I’m running a business as a sole-trader. It’s going very well and i’ve been running it for the last 3 years. It’s just me at the moment but I may bring someone on full time towards the end of this year. I do my own books but I’m looking to get an accountant to do it. I feel that it may be time to set up a limited company but want to find out from other business owners if it’s the best step.
What are the Pros when setting up a limited company? From what I understand, I’ll be more protected if something goes wrong? Which is one of the main issues I’m concerned with. I’m sure nothing will but I don’t want my personal assets to be at risk.
The 3 main reasons to set up a limited company I can see are:
– It’s a separate legal entity
– I look more professional
– My business name is protected
Is that right? What other Advantages are there? Are there any disadvantages?
- Posts: 17
There are quite a few advantages of setting up a Limited Company compared to continuing running as a sole trader.
– Separate Legal Entity, Like you mentioned. This means you are not solely responsible. The business is it’s own entity and in the unfortunate event of being sued, your personal assets should be safe.
– Professional Status. You will look more professional to a certain degree. At the end of the day, anyone can set up a limited company however it can give off a better impression to other businesses and customers. They may trust you more.
– Reduced Tax. You may be able to reduce your Tax and national insurance, You can keep your salary lower enough to not be charged and then take it out in other ways. Your accountant will be able to talk you through this.
– Shares. You can issue shares in your new limited company. By doing this you can actually give shares to family members, your wife? Possibly. This way you can split business profits and have reduced tax or none at all.
The disadvantages that comes with a limited company is that you usually pay more and there are stricter rules on how you control your money. Overall though, As long as you have a good accountant I can’t see any real downsides. Best to go and sit down with one, they are usually worth their weight in gold.
Then your accountant can really get in depth with your business and be able to give you all the advice you need. I found this article on money making expert, https://www.moneymakingexpert.com/does-your-business-need-an-accountant/.
Take a read of that and go and see an accountant. Those are you best steps!
- Greg Jones
- Posts: 16
Loads of pros when registering a LTD company like lemons has listed.
Another good pro is if you have a commercial vehicle you can claim pretty much all of it. It’s handy if you have another car though for personal use or you’ll have to put down personal mileage. Stay away from company cars!
Also, your business name is protected to a point. No one else can register a company under it but as far as I know it doesn’t stop other businesses using the name. That comes under Trademarks 🙂
Go and see an accountant about setting up a limited company. Even though it costs money to set up and to pay your accountant. I always see those costs come back in Tax relief.
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Limited companies have Limited Liability.
Limited companies are kept separate to your own assets. Greater Tax advantages as long as you don’t start withdrawing a large salary.
You have more complex accounts and it costs more but if you need to be a limited company it’ll save you more.
- Posts: 73
I think this is the quickest anyone has had an question answered on this forum. I’ll quickly sum up.
– It’s limited liability and a separate legal entity.
– Tax advantages
– Commercial Vehicle Allowances
– Registering your company name
– Investor opportunities
– Trust, you look more well established
– pension schemes, another good way to avoid tax
– You can all yourself a Director, Which is cool. Your like Steven Spielberg…. Mainly, your car insurance comes down a little haha
– Costs more (You should see more of a saving though if your earning a lot)
– More Complex accounts (However accountant sorts this)
– Company name can be limited/restricting or it may already be registered.
– Withdrawing money can be more complicated.
Go and see an accountant for sure. Best of luck Barnard.