Running your business as a Limited Company is the most complex of the common business structures but it does offer a number of benefits that operating as a sole trader or partnership doesn’t.
Establishing a limited company is a relatively straight forward process. Stewart Accounting Services can assist you with the process. Provided the name of the limited company is available the company can usually be set up at Companies House within a couple of days. A limited company is a separate legal entity from the owners (shareholders) and managers (directors). The company’s debts and liabilities are the responsibility of the limited company and not the shareholders and directors. The exception to this is that if a director or shareholder gives a personal guarantee to a lender or creditor then if the company is unable to pay this debt the guarantor would be personally liable. There are a number of advantages and disadvantages of running your business as a limited company: Advantages
- Limited Liability – Shareholders and Directors are only liable for the money they have invested in the limited company and are not personally liable for any of the company’s debts if the company is unable to pay the debts.
- Prestige – Limited companies are seen as more stable, established and professional.
- Tax benefits – if profit extraction is managed by salary and dividends then there are tax savings compared to a sole trader or partnership.
- Cost – professional costs tend to be higher for a limited company than a sole trader or partnership.
- Public scrutiny – Limited companies must submit abbreviated accounts with Companies House.
- Losses – limited company taxable losses are locked into the company therefore cant be offset by the directors or shareholders against their other personal income.
Contact Stewart Accounting to discuss how we can help with your limited company business.
Mark has provided us with valuable information and advice which has saved us from many of the common pitfalls of running a small business.