Many of us dream of leaving the conventional working world behind and starting our own business, but it can seem daunting if you have no idea where to start. From coming up with an idea to raising the funds required; there are many things to consider when starting a business of your own.
One popular way to start your own business is by forming a limited company, and there are many advantages of choosing this business model over any other. Forming a limited company is actually very straightforward, and can take only a few minutes to register. If you want to know more about how to form a limited company, and the benefits of doing so, then read on for our brief guide.
What is a limited company?
Put simply, a limited company is an organisation set up to run a business. A limited company business model means that the owner does not have sole responsibility for the business, and the finances will be separate to your own personal finances. Any profit made is owned by the company (after taxes have been paid), and this can then be shared amongst the individuals and organisations who own shares in the company.
The status of a limited company is different to that of a sole trader, which means that the tax and legal liabilities of a limited company are separate from the personal ones of any owner or shareholder in the company.
How do you set one up?
Forming a limited company is very simple; all you need to do is register it with Companies House (the UK government register of companies), and inform HMRC when your business begins trading. Your company must maintain annual statutory accounts, send an annual return to Companies House, and provide an annual tax return to HMRC.
The benefits
There are several advantages to choosing a limited company model for your business, aside from the fact that it means your own personal assets are protected if the business fails. Setting up a business as a limited company allows you to claim on more expenses; including on things like software, travel expenses, client entertainment and more.
Although personal and business finances are separate, choosing a limited company allows you to have much more control over the business, and you can control the finances without the need to involve a third company. A limited company also gives your business a certain credibility, and it’s said that customers and investors tend to trust this model more than other company structures like sole trading.
If you’re thinking about forming a limited company and need some professional assistance, get in touch with Barron & Co Ltd. Based in Birmingham, our experienced Chartered Certified Accountants are on hand to help business owners incorporate their companies for an affordable price. We offer expert advice on all aspects of setting up and running a business, and can work with you to ensure your next venture is as successful as possible. For more information about our limited company services, give us a call today or visit our website.