Advantages of a Limited Company
- If a limited company should fail there is less risk to personal and family assets than there is with sole traders or partnerships.
- These days a company only needs one shareholder who can also be a director, and a company secretary who does not need to be a director.
- Companies with a turnover below £5.6 Million do not need an audit making the cost of year end accounts much closer to those of a Sole Trader.
- Shareholder Directors can select a package of Low Salary and Higher Dividends aimed at reducing Tax and National Insurance both for the individual and the company. Savings can easily be over £1,000 per year if sole trader profits are as low as £20,000, and over £3,200 per year compared to a sole trader with £45,000 profit.
- Shareholdings can be split between family members to spread the dividends and reduce higher rate tax liability (or eliminate it all together).
- Companies with profits below £300,000 pay tax at just 21% (20% from April 2011), rather than basic rate of 20% or higher rate of 40% personal tax and Self Employed National Insurance of 8%.
- Limited Companies often have a higher marketing profile than other businesses.
- Limited Companies can be easier to sell than Sole Traders or Partnerships.
- There are a few disadvantages, but as long as the company does not trade whilst insolvent and there is no fraud there is very little risk to the directors.
- There is a higher paperwork burden with a company but the advantages outweigh the disadvantages.
We can form your Limited Company from as little as £150.00 + VAT + Agents fees, which includes lots of additional tax saving advice.
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