- If a limited company should
fail there is less risk to personal and
family assets than there is with sole traders or partnerships.
- These days a company only
needs one shareholder who can also be a director, and a company
secretary who does not need to be a director.
- Companies with a turnover
below £5.6 Million do not need an audit
making the cost of year end accounts much closer to those of a Sole
Trader.
- Shareholder Directors can
select a package of Low Salary and Higher Dividends
aimed at reducing Tax and National Insurance both for the individual
and the company. Savings can easily be about £1,500 per year
if sole trader profits are as low as £20,000, and over £4,600
per year compared to a sole trader with £45,000 profit.
- Shareholdings
can be split between family members to spread the dividends and
reduce higher rate tax liability (or eliminate it all
together).
- Companies
with profits below £300,000 pay tax at just
19%, rather than basic rate of 22% or higher rate of 40% personal
tax and Self Employed National Insurance of 8%.
- Limited Companies often
have a higher marketing profile than other
businesses.
- Limited Companies can be
easier to sell than Sole Traders or Partnerships.
- There are a
few disadvantages, but as long as the company does not trade
whilst insolvent and there is no fraud there is very little risk to
the directors.
- There is a higher
paperwork burden with a company but the advantages outweigh the
disadvantages.
- We can form
your Limited Company from as little as £150.00 + VAT which
includes lots of additional tax saving advice.
- Also see our Tax Tips page
for Company Directors.
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