You’ve got your business up and running, and have planned everything, from daily business production down to the monthly cash flow reports. Now, step back and look at the bigger picture. What legal business structure can protect and grow your investments? Is it time to set up a private limited company?
How Can I Benefit from it?
Limited liability and lower taxes are two of the main benefits you’ll get from running a limited company. If you’re a director of a limited company and things go wrong, you’re not personally liable for any financial losses made by the company. Your liability will depend on what you’ve invested, unless there’s fraud involved. This allows you to expand your investment without the risk of endangering assets beyond your personal liability.
Limited companies are more tax efficient when it comes to running a business. They have the flexibility to determine the proportions of salary and dividends taken, as sole traders’ basic accounts are subject to tax at fixed rates and thresholds.
What are the Running Costs?
The running costs in a limited company are basically the same as any type of business structure. It may cost extra to arrange your own wages and prepare year end accounts, but your accountant will sort these matters out in advance. There’s also an annual statutory fee for keeping the company on the register at Companies House. Late delivery of documents at Companies House also means costly penalties.
Will I Need an Accountant and an Audit?
It’s legal requirement for a limited company to have an accountant, but it’s better to get the services of a third party auditor to prevent costly errors, organise year-end statutory accounts in advance, and reduce your tax charges. You’ll need a mandatory audit once your turnover sales or balance sheet value is in the millions. Your accountant will advise you of the exact figures that changes periodically.
The limited company business structure provides protection for corporations and their shareholders. Many start-ups who hired professional limited company accountants have been able to raise their investment capitals, as they’re able to attract new investors into corporate entities.