Are you looking to start your own business, but not sure which type of structure to choose? Many small businesses choose to set up as a limited company. In this blog post, we’ll take a look at the benefits of setting up a limited company and why it may be the right choice for you.
One of the main benefits of setting up as a limited company is that it provides you with limited liability protection. This means that if your business fails, any debts or losses incurred by the business are not your responsibility; instead, they will be taken on by the company itself. This way, your personal assets such as your home and car remain protected in case things don’t go according to plan. It also gives you more credibility when dealing with customers, suppliers and lenders as it shows that you are serious about running a successful business.
Another benefit of setting up a limited company is that you can enjoy certain tax advantages. Companies are subject to different tax rules than individuals, so you may be able to lower your overall tax bill by taking advantage of deductions or other allowances available only to companies. A prime example of this is the tax free dividend allowance that in 2022/23 is £2,000. You will also have more control over how much money is taken out of your business in terms of wages or dividends, whilst with a sole trader business you are taxed on your profit where as for a limited company you are only taxed on what you take out.
Lastly, when setting up as a limited company, there are certain legal requirements that must be met such as filing annual accounts with HMRC and Companies House. Having these records in order can help protect you and demonstrate good financial management practices should regulators come calling.
Setting up as a limited company has many advantages over other types of structures such as sole traderships or partnerships. Limited liability protection ensures that any debts or losses are not personally attributed to you while certain tax advantages can help reduce your overall tax bill every year. Additionally having clear records when filing accounts helps demonstrate good financial management practices. All these factors make setting up a limited company an attractive proposition for small businesses looking for success both now and into the future.
If you decide a limited company is best for you we can get your company set up and registered within a couple of days, ensuring you have the have the correct share structure that suits your business plans, we even offer a registered office service so our office is listed at Companies House. This is useful if your only address is your personal address.
We can complete this on your behalf for £150 + VAT.
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