Setting your business as a Limited Company has many professional and financial benefits! It is a widely used legal structure for all sizes and types of businesses. Limited Company can now be set up online just in a few hours. Becoming your own boss allows you to choose your way of working, plus unlocking other benefits such as tax planning. However, there are a few points that you must consider before making the leap. As a limited company director, you will have a range of new responsibilities, such as filing your company’s paperwork. Here we have outlined the pros and cons of "incorporating " (opening a Limited Company ) your business over the option to trade as a Sole Trader.

• a limited company is a separate legal entity
• minimising personal liability, meaning your personal assets will be secure and the owners' liability is limited
• potential for tax efficiency and planning, deferring personal income to maintain a certain tax rate treshold
• invest pre-tax trading income in a company pension scheme
• split your business profits and minimise personal tax liabilities by issuing shares to your spouse or family members
• credibility and prestige, incorporated business gives more confidence to suppliers and customers in their trading with your company
• smaller percent of tax payable on sale of the business if conditions of Business Asset Disposal Relief are met
• Business Relief for Inheritance Tax

Disadvantages of a limited company

• must be incorporated at Companies House
• you cannot set up a limited company if you are an undischarged bankrupt or a disqualified director
• some personal and corporate information will be disclosed on public record
• accounting requirements are more complex and time-consuming
• you may need to appoint an accountant to help you with your tax affairs
• strict procedures must be followed when withdrawing money from the business
• Confirmation Statement and Annual Accounts must be filed at Companies House and HMRC every year.
• companies are required to adhere to strict record-keeping requirements, including taking minutes of meetings and recording all decisions taken by directors and shareholders
• company registers and records must be maintained and made available for public inspection at your registered office
• if you make any changes to your company details, you must notify Companies House immediately

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