A
Company Limited by shares is an ideal
format for a small & medium size
business.
Thousands of self-employed professionals
are discovering the advanges of changing
to a Limited Company. So they can not
only protect their personal assets,
but can also save thousands of pounds
on Income.
Why have a company?
A
company is a separate legal entity in
its own right, separate from the shareholders
those who own its directors those who
run it.
|
A
company can itself
-
rent
and own property
-
hire
and employ staff
-
act
as director or secretary of another
company
-
enter
into contracts with other companies
and indivisuals
-
sue
in the courts or be sued
|
|
Advantages:
- Limited
Liability - A private company
may be limited by shares or by
guarantee (a commitment to contribute
a given sum if the company is
wound up).
If the company is unable to
pay its debts and is put into
liquidation, the members will
not be required to contribute
more than they have actually paid
or agreed to pay towards settling
its debts. This amount is
usually determined by the value
of the shares held, e.g. If a
company has issued 100 ordinary
shares of £1 each and they
are fully paid, the shareholders
will NOT have to pay any more.
- Reduced
tax bills - At present there
is NO Corporation tax on first
£10,000 of profits), Next
£20,000 Small companies
rate 19% only. This is a common
way of saving valuable cash resources
for your business. Click
here to calculate your tax
liability.
- Protection
of name (Companies House will
not register another name that
is the same). Also if another
name is registered and it is considered
to be 'too like' another existing
company the latter can lodge an
objection with Companies House
who can direct the new company
to change its name.
- More
credibility in the market
place
- Raising
capital - easier to raise
loans for the business, etc.
- Incorporation
may also be specifically beneficial
to the self-employed, with children
going to university. Instead of
parents paying the undergraduates
a grant from their own money,
the children over 18 might be
given shares and paid a dividend
by the company.
- Administration:
Setting up a limited company
means a lot of paperwork. And
there is ongoing maintenance
- for instance, you must file
your annual accounts at Companies
House every year.
-
Privacy: For a fee, anyone can
look at your company accounts
and check your shareholder's
identities.
- Guarantees:
Shareholders and directors may
have to personally guarantee
contracts entered into with
lenders or suppliers.
- Closure:
Winding up a company is more
complex and expensive than sole
trading or a partnership.
If
unsure you should always seek an advice.
SELF
EMPLOYED?
Form
a company and save £3,292 on tax
bill on earnings of £25000
Self
employed with income of
|
25,000.00 |
|
| Less
personal allowance |
-4,615.00 |
|
Tax & class 4 N.I. on
|
20,385.00 |
=
5,785.00 |
Company
with net profit of
|
25,000.00 |
|
Pay
director a salary of |
4,500.00 |
|
| Corporation
Tax on |
20,500,00 |
=
2,493.00 |
SAVINGS |
|
£3,292.00 |
|
|
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