Here at Warr & Co, we often hear questions from our clients about company formation – some specific, occasionally technical, but always important.
In light of this, we’ve compiled a list of the most frequently asked questions about forming a limited company.
What are the advantages of setting up a limited company?
There are several advantages of opting to form a limited company over other types of business structure:
- Shareholders and directors of limited companies only normally only take on limited liability for any debts or losses incurred by the business. This affords you more financial protection than sole traders, who take on personal liability for their businesses.
- Due to its very nature, a limited company is deemed to be a separate legal entity from its shareholders. This means that the company will exist beyond the life of its members.
- A more professional image is created by a limited company and more business like to do business with companies, instead of sole traders.
- Limited companies enjoy more favourable tax positions than self-employed people.
- Limited companies only pay tax of up to 20% on their profits, compared to sole traders and partnerships who may be taxed at a rate of up to 45%.
Speak to an adviser to learn more about the benefits of setting up a limited company.
How much does it cost to set up a limited company?
The costs involved with setting up a limited company depend on whether you register online or by post.
Registering via the government’s website is the cheapest option, costing just £12.
Postal applications are charged at either £40 (with a processing time of between 8 and 10 days) or £100 (for same day registration).
Warr & Co offers company formation services which includes, if required, discussing with you the initial set up of the company. You can find out more about these services on our Company Formations page.
The downside of setting up a limited company is there are more complex and restrictive rules governing the accounts and bookkeeping of requirements, than sole traders or partnerships.
Warr & Co offer competitively priced accounting packages to help you in this area which will allow you to concentrate on the running of the business.
There are certain restrictions with regard to the company name.
The information relating to the owner of the company and the company are displayed on public record You also need to keep other records which include:
- the personal information of directors
- shareholders and company secretaries records of annual shareholder meetings
- including votes and resolutions loan repayments company indemnities loans secured against assets owned by the business.