Sole owners may find the shift to Limited Company directorship difficult. Despite being the most frequent business form in the UK, establishing itself as a limited company has various advantages. Sole Traders run their own businesses. Becoming a freelancer is easy. This is why so many single-owner firms start each year. Register for Self Assessment online with HMRC to acquire a tax code reference number.
Establishing a Limited Company in the United Kingdom: Why should I consider creating a Limited Liability Company?
The procedure of forming a company registration UK is a bit more time-consuming than merely registering as a sole proprietor. Managing a limited business comes with additional financial and legal responsibilities, but these additional burdens are well worth the work to reap the benefits of Limited Company status.
Here are 10 compelling reasons to consider starting a business in the UK rather than continuing to work as a self-employed individual.
As a Limited Company, you’d pay less personal tax. Your company’s earnings are taxed at 19% (2018/19). April 2020 goal: 17%. Directors may accept a modest salary and collect dividends. Reduces NICs (National Insurance Contributions). Individually taxed limited company dividends are NIC-free. You may retain more corporate profits.
An entity of its own will be established
LLCs are separate from their owners. All the company’s assets, including its bank account and loans, are separate from its owners. Your personal assets will be protected if the firm fails (other than when there are criminal activities involved, such as fraud).
Limitation of liability
Sole owners don’t have limited liability, thus they’re personally accountable for corporate debts. Limited liability protects you in an LLC. Limited liability protects you from your business’s losses. You won’t have to use your personal money or assets to repay your company’s obligations.
A polished image
Your business will be seen as more professional if you register a Limited Company. Building client confidence and trust is an important part of gaining new customers. When it comes to doing business with a huge firm, a sole proprietorship is not an option, but a limited company is.
Enhanced access to capital for small businesses
As an LLC, acquiring credit, finance, and company loans is easier. As a limited company, you’ll have more options for business funding, and many lenders will give you better rates and terms.
As part of company creation, your business name will be registered with Businesses House.
When you register your company name, UK law protects it from being used by others. No one may use a name too near to your registered business name, even if their company is similar to yours or in the same sector. You can rest easy knowing your firm won’t be imitated or competed with to steal customers or ride your success.
Misconception: establishing a limited company is costly and involves a lawyer and business paperwork. Fintech Harbor Consulting has years of experience of register offshore company online. With our help, you may form an LLC in one working day.
Options for shareholders
As a sole owner, you might be the only director and shareholder. You just need one shareholder to form a company, therefore being a single owner doesn’t stop you. Future funding may require issuing shares. Each class of shares has its own restrictions and obligations. By writing your own shareholder agreements, you control voting rights and shareholder power.
Contributions to a retirement plan
As an LLC, you may deduct your executive pension. This means you’ll get a tax-saving you wouldn’t as a sole owner.
Establishing a limited company in the United Kingdom: the legacy concerns
Imagine you were killed or disabled in an accident. Solo entrepreneurs would be devastated. You may transfer ownership of a limited corporation to another person. You may retire knowing that your hard work hasn’t been in vain and that your firm will continue even after you’re gone.