Advantages of forming a limited company
The 1.15 million figure is testament to the fact that the limited partnership is the most common business established in the UK. Most budding entrepreneurs start their venture as a limited company. There have been several sole traders and partnerships that later became limited companies. This is essentially due to the number of perks that come along with this status.
Benefits of forming a limited company
Some of the main advantages of establishing a limited company are:
Limited Liabilities: This is the main benefit of doing business as a limited company. The limited liabilities of directors and shareholders remove a great deal of failure-related anxieties from officers, thus helping them to operate freely. In a sole proprietorship, partnership, or any other non-limited business establishment, personal assets are at risk in the event of business bankruptcy. As long as a limited company is operating legally, according to the clauses mentioned in the Companies Act, the officers can operate without fear of losing personal property.
Tax Free and Tax Reduction Benefits: The initial £10,000 of an ltd company’s profits are not taxable, unlike sole proprietorships and partnerships. The company’s profits can be given as dividends to shareholders. Currently, National Insurance does not refer to dividend payments, further reducing tax liabilities. Legislative changes in recent years have meant lower costs in terms of taxes and accounting for corporations.
Cost Factors: Although the costs associated with managing and operating ltd companies are not significantly higher than non-limited companies, they definitely outweigh the benefits of being self-employed.
Protecting the company name: A ltd company is not required to start operating within a specific period of time after its registration. This allows potential entrepreneurs to register their business names in anticipation of some future developments. In this way, forming a limited partnership becomes a low-cost method of protecting a company name for future use, since two limited companies are not allowed to operate under the same name.
Trust: Operating within this configuration offers a sense of trust to business owners, vendors, and customers. Often large organizations prefer not to deal with unlimited business enterprises.
You can also take the help of a reputed agency to form a limited liability company. The electronic method of registration requires the intervention of an agent. CompanyFormations247.co.uk is a highly reputable agency in the UK offering prompt services at very reasonable prices.