Choice regarding profits
Limited Companies are a separate person for legal and tax purposes – they are separate from the individuals that own them. They pay Corporation Tax on their profit which is normally lower than personal Income Tax. You can choose when and how to extract funds from your Company.
If you have a very profitable business but do not need to withdraw all the profits immediately, then with careful timing a Limited Company can help you to save tax. We provide a comprehensive service enabling you to take advantage of this perfectly legal tax planning.
Limited liability status
Because a Company is a separate person for legal and tax purposes, if the company cannot afford to pay all its debts, you will not normally be personally liable for them. However, there are strict rules regarding wrongful/fraudulent trading, and directors can be held personally liable if they have acted negligently/fraudulently.
Some businesses feel more comfortable trading with a Limited Company rather than a sole trader, as the perception is that it will be a more established business, and therefore more reliable.
Investment Companies are designed to enable more people to invest in them. There are a number of special schemes (e.g. Enterprise Investment Scheme) that give tax incentives to investors in smaller companies.
Unlike human people, potentially a Company can live forever. You can plan for the future by giving or leaving shares to other people – and the company will continue to exist, containing any business or assets until the owners decide otherwise.
To discuss the advantages of setting up a Limited company please get in touch with us.