A lot of people want to start up in business for themselves. However some people may start trading and not be fully aware of what type of business is best for their needs. It is worth considering the Benefits of Trading as a Limited Company to see if this is right for you. This article is intended as an introduction to give you an idea of how this type of business can be right for you.
This kind of business is a legal existence that is separate from the management and members that comprise its membership. This means that any debts or assets are effectively owned by the business rather than the people who invest in it. There are various advantages to this.
One of the biggest is the difference between what happens if a sole trader or partnership gets into financial difficulties. In this instance there is no legal separation between the person who established the business and the business itself. This means that the sole trader or partners are liable for the debts that are accrued.
In a limited company the only thing that can be reclaimed are the assets of the business. The only thing the members are responsible for is any amount unpaid on their shares. This protection is often the most attractive advantage for people who want to make sure there property and other assets are secure when they invest in their shares.
Another distinct advantage is in the way different types of businesses are taxed. A sole trader or partnership is charged income tax based on the amount of money that they earn. By contrast this type of business is charged corporation tax based on their profits. This means they cannot reclaim costs in the same way that a limited company is able to.
Of the various Benefits of Trading as a Limited Company one that is often attractive is being charged corporation tax as opposed to income tax. This means that there are more ways of avoiding paying tax on costs that would not be possible in a partnership or as a sole trader. It is worth talking with a local independent financial adviser to see if this is appropriate for your business.
This kind of business is a legal existence that is separate from the management and members that comprise its membership. This means that any debts or assets are effectively owned by the business rather than the people who invest in it. There are various advantages to this.
One of the biggest is the difference between what happens if a sole trader or partnership gets into financial difficulties. In this instance there is no legal separation between the person who established the business and the business itself. This means that the sole trader or partners are liable for the debts that are accrued.
In a limited company the only thing that can be reclaimed are the assets of the business. The only thing the members are responsible for is any amount unpaid on their shares. This protection is often the most attractive advantage for people who want to make sure there property and other assets are secure when they invest in their shares.
Another distinct advantage is in the way different types of businesses are taxed. A sole trader or partnership is charged income tax based on the amount of money that they earn. By contrast this type of business is charged corporation tax based on their profits. This means they cannot reclaim costs in the same way that a limited company is able to.
Of the various Benefits of Trading as a Limited Company one that is often attractive is being charged corporation tax as opposed to income tax. This means that there are more ways of avoiding paying tax on costs that would not be possible in a partnership or as a sole trader. It is worth talking with a local independent financial adviser to see if this is appropriate for your business.
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