Is Your Business Ready to Form a Limited Company
Updated: Oct 12, 2019
If you’re a sole trader, you may have set up as such in the beginning to make things easier from an administrative point of view. And now that you’re earning more, you may be thinking of setting up a limited company. But how do you know when it’s the right time to start running a limited company, and what do you need to consider before taking the leap?
Why might you want to set up a limited company?
Being a limited company is better suited when business is expanding:
- It can make you more attractive to potential customers.
- You may also be bringing in other directors and shareholders.
- Tax reasons - Limited companies are usually more tax efficient than sole traders when profits expand allowing better tax planning.
- Plus, you have limited liability. This means you are not personally liable for the company’s debts, so you only stand to lose what you’ve put into the company.
- Another benefit of setting up a limited company is that your company name will be protected once you have registered it.
There are some disadvantages of trading as a limited company?
- There is added responsibilities - As a director you have legal requirements which can be costly and time consuming. You may need to hire an accountant to help you deal with some of this. You’ll also need to file an annual return.
- Details of the company and its directors will be listed on Companies House.
If you feel now is the right time to discuss the change to being a Limited Company, or you want to start your business from the beginning as a limited company then we are happy to help, just contact us to book your free initial consultation.