Trading through a Limited Company has become increasingly popular, due to flexibility, security and tax efficiency.

Whilst there are other trading options detailed on our website, these rarely prove to be either as tax efficient and/or compliant with tax laws. If you are contemplating starting your own business, these are aspects that you do need to consider. We are confident that you will find that the process is more straightforward than it may first appear.

Benefits of a Limited Company 

Limited Liability

The obvious advantage of a Limited Liability Company is the financial security that comes with business. As already mentioned, the Company’s shareholders will only be liable for any debt the company accrues according to the levels of their own investment and no more. This can provide a comfortable feeling of security for investors in the Company.

Separate Entity

A Limited Company has a separate legal entity from the owners, even if you own 100% of the shares. The profits and assets of the company belong to it, not you as the shareholder; profits made by the company are withdrawn by dividends to the shareholders or as salary to employees.

Tax

The main advantage of operating through a limited company is that profits can be extracted by dividends, rather than as salary. Because dividends are not subject to National Insurance contributions, the savings can be very beneficial.

Protection of Company Name

The choice of company names is restricted and, providing a chosen name complies with the rules, no-one else can use it. The only protection for sole traders and partnerships is trademark legislation.

Ownership and Succession

Because a limited company is a separate legal entity in which you as a director hold shares, it is much easier to transfer ownership than with a more informal business structure – you simply sell or transfer your shares to someone else. 

Claim on a wider range of expenses

Anything that is solely classed as a business cost can be claimed back on expenses. Trading through a Limited company means you can claim on a wide range of expenses.

More credibility

Operating as a limited company often gives suppliers and customers a sense of confidence in a business.