Thu. Jul 29th, 2021

The 1.15 million figure is testimony to the fact that limited company is the most common business set up in the United Kingdom. Most budding entrepreneurs begin their venture as a ltd company. There have been several sole traders and partnerships that have later more info on startups and Ltd companies converted to limited companies. This is essentially due to the number of advantages that accompanies this status.

Benefits of a Limited Company Formation
Some of the main advantages of forming a limited company are:

Limited liabilities: This is the principal benefit of conducting business as a ltd company. Limited liabilities on directors and shareholders take away a great amount of failure-related anxieties from officers, thus aiding them to operate freely. In a sole proprietorship, partnership or any other non-limited business set up, personal assets are at risk in the event of business failure. As long as a limited company is functioning legally, according to the clauses mentioned in the Companies Act, the officials can operate without fear of losing personal assets.

Tax-free and tax reduction benefits: The initial £10,000 of a ltd company’s profits are not taxable, unlike that of sole proprietorships and partnerships. Company profits can be given as dividend to the shareholders. Currently, National Insurance does not pertain to dividend payments, reducing tax liabilities further. Legislation changes over the past years have meant lower costs in terms of taxation and accountancy for limited companies.

Cost factors: Although the costs related to the management and operation of ltd companies is not significantly higher than non-limited businesses, they definitely outweigh the benefits of being self-employed.

Protect company name: A ltd company is not obliged to begin trading within a specified time frame after its registration. This allows prospective entrepreneurs to register their business names in anticipation of some future developments. In this way, forming a ltd company becomes a low cost method to protect the name of a business for future use, since no two ltd businesses are permitted to operate with the same name.

Confidence: Functioning within this setup offers a sense of confidence to business owners, suppliers and customers. Often, big organizations prefer not dealing with non-limited business houses.


Leave a Reply

Your email address will not be published. Required fields are marked *