Limited Company Registration
There are many benefits to trading as a limited company. Below is a list of the advantages and disadvantages of limited company registration.
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Advantages to Limited Company Registration
Status
The status of a business is commonly perceived to be higher if incorporated. Tax and National Insurance
Remuneration can be calculated to dramatically reduce your tax and national insurance liabilities.
Expenses
Any expenses incurred which are wholly and exclusively for the business can be offset against the limited companies liability.
Limited Liability
Your personal assets are normally treated as separate from those of the business and therefore a company's creditors cannot hold you personally responsible for debts incurred by the business. Protection of Business Name
Registration protects your company name by law and prevents anyone else trading with it. This is not the case with a sole trader or partnership. Continuity of Business
In a partnership, the death of one or more partner may lead to his/her share being withdrawn by the partner's relatives, hence potentially ruining the business. In a limited company set-up, the death or resignation of any director does not affect the structure of the company which can continue to trade as before. ^ Back to top
Disadvantages to Limited Company Registration
Accounts
Accounts and tax calculations have to be prepared and submitted to the Inland Revenue and Companies House meeting statutory requirements. Personal Tax Return
The Directors of limited company, by law, must complete a self-assessment tax return each year. Value Added Tax
If the company turnover exceeds £60,000 in any 12 month period it must become registered for VAT. This entails charging VAT on all invoices and submitting quarterly VAT returns. Time
It takes time to run a limited company efficiently. Proper records must be kept for tax purposes. Companies which cannot provide Inland Revenue and Companies House with proper records of all company transactions including invoicing and receipts for expenses will be heavily penalised.
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