Although the sole trader route, which is commonly referred to as being self employed, is the most popular way of running a business in the UK, there are significant advantages of operating as a limited company.
Here, we highlight 10 of the biggest benefits a limited company gives you over working as self-employed.
Aside from the sole trader route, the limited liability company is the most popular business structure in the UK.
With a limited company, the liability of company directors is ‘limited’ in that the company’s finances are separate from the personal finances of the business owner. This is not the case for those who run their business as a sole trader (self employed).
Limited company shareholders are not responsible for any debts run up by the business, although banks may ask company directors to provide loan guarantees for commercial loans or credit taken out in the company’s name. (more…)
If you decide to work for yourself and begin trading as a sole trader, (self-employed) you will need to set up your accounts to record your income and expenses.
In order to do this you will need to be aware of tax, national insurance and other factors that will affect the records you need to keep as a sole trader.
To help you understand your duties and to get your book-keeping done painlessly, here’s the low-down on setting up your sole trader accounts. (more…)
When you start a business with someone else, it’s always a good idea to lay down some rules on important issues, such as; how you will run the company, your respective responsibilities and what happens if someone wants to leave the business. Agreeing on how you will handle these, and other important matters, will save a lot of anguish down the line.
If you are going into business with other individuals working under a partnership structure, you should do this with a Partnership Agreement. If you are setting up a limited company, you will a need to record these in a Shareholder’s Agreement.
This guide explains what a Shareholder’s Agreement does, who should get one and what should be included in the document.
If two or more people wish to go into business together, and don’t want to set up a limited company, a partnership offers a simple way to get started. It is similar in many ways to going the sole trader route for an individual.
One of the main benefits of becoming self employed is the ease with which you can start up and run your new business.
You can even become a sole trader (another term for self-employed) whilst working as an employee for someone else, so you can test the water and see whether working for yourself suits you.
To help you understand some of the most important issues, you’ll need to tackle, here are 5 things you need to do when you decide to go self employed: (more…)
There are a variety of reasons why businesses or consultants may choose to operate via a limited company.
For some, the protection limited liability offers if things go wrong is an attraction, for others, the potential tax benefits are the main reason why they choose to be a limited company over a sole trader.
To explain more about the tax advantages of a limited company, we asked Manchester based accountants Alexander & Co to outline the tax-effective ways you can pay yourself if you own a limited company. (more…)
For those new to the world of business there are many things to consider. One of the biggest decisions you’ll have to make when you’re starting a business is whether to set up as a sole trader (self employed) or limited company.
Both sole traders and limited companies have their distinct advantages and disadvantages (make sure you read our guide on 10 Advantages of running your business as a limited company instead of being self-employed to learn the main benefits of the limited company option).
Whilst the professionalism and protection that comes with running a limited company is appealing to many, becoming self-employed is the more straightforward option, and with it comes a number of other benefits. (more…)
The simplest way to start a business in the UK is to become self employed. This is also commonly referred to as becoming a sole trader.
There is minimal paperwork to take care of, and you don’t have to pay any company formation costs. However, you do need to formally register as self employed with HMRC, and assume responsibility to pay your own income tax and National Insurance liabilities.
Here are the steps you must take to if you want to become self employed, plus the other aspects you will also need to consider when working for yourself: (more…)
If you are setting up a limited company, you should think carefully when choosing your company name. Alongside the business reasons for choosing an appropriate name, there are also a number of company naming rules you should be aware of.
If you breach certain naming rules, Companies House will simply reject your company formation application.
One of the first, and most important decisions you make when you set up a new business is to decide what type of legal structure you should work under. So which business structure is best for you? (more…)
When a company goes into liquidation, it’s generally understood that employees are entitled to redundancy pay. But what about the company directors themselves? Ultimately it is their business that has failed, and their livelihood that has collapsed.
Unbeknown to many directors, the government does provide limited company directors with statutory entitlements, such as redundancy pay, in a number of situations where a limited company has become insolvent and entered liquidation.
With some 80,000 personal insolvencies a year and around 14,000 companies becoming insolvent annually, it’s an issue that many business owners can find themselves facing, but a lack of understanding about statutory entitlements means many limited company directors end up missing out.
We’ve therefore asked Gary Addison, an experienced insolvency and redundancy expert, to explain more about what statutory entitlements actually are, and how they apply to company directors. (more…)
If you have set up in business via a limited company, there are a number of duties you will have – as well as legal and financial responsibilities – if you are a director of the company.
This article provides an overview of what to expect as a limited company director.
Since 6th April 2016, nearly all UK companies have been required to maintain a register of Persons with Significant Control (also known as a “PSC register”).
The PSC register obligations were introduced as part of the Small Business Enterprise and Employment Act 2015. The government’s intention was to enhance corporate transparency where complicated ownership structures can sometimes make it difficult to tell who owns and controls companies.
However, even small limited companies with very simple structures are required to maintain a PSC register. And, from 30th June 2016, companies need to file this information with Companies House as part of the new Confirmation Statement (which replaces the Annual Return from this date).
This guide explains to small business owners what a Person with Significant Control is, how to produce a PSC register and what companies need to do to stay on the right side of the law.
All UK limited companies, large and small, have been required to file an Annual Return (AR01) with Companies House at a set point each year.
From 30th June 2016, as part of the Small Business Enterprise and Employment Act 2015, the Annual Return is replaced with a new document called a ‘Confirmation Statement’.
Like its predecessor the Annual Return, the Confirmation Statement is a snapshot of information about a company which must be provided once per year. Most of the information provided is placed on the public record by Companies House.
Here’s everything that limited company directors need to know about the new Confirmation Statement; (more…)
Becoming a sole trader is the simplest way to get your new business off the ground. You can start trading immediately, subject to any industry-specific licences or insurances you might be required to have.
As a sole trader, you will have complete control over your business and finances. You can adapt quickly to any changes in your business, without having to concern yourself with a great deal of bureaucracy. (more…)
If you are considering setting up your own limited company, the prospect of ‘dealing with the authorities’ may seem daunting. In reality, the company formation process is very simple – whether you apply yourself, or use a registration agent to set up the company on your behalf.
Before deciding to become self-employed, it’s a good idea to think through the implications of working for yourself…
If you are setting up a limited company for your business you will want it done quickly, professionally and without any hassle. That’s why we’ve teamed up with one of the UK’s leading company formation agencies to provide you with an instant online service.
The type of structure you use will depend on a number of factors unique to the business you want to start. In this article, we look at the main structures – sole trader, limited company, partnership and LLP and highlight the pros and cons of using each one. (more…)
Is there a better way of doing business? Is there a more ethical and sustainable business model that is less focused on the short-term chase for shareholder profit? The answer could well lie with the co-operative business model.
A dormant company is one that doesn’t trade and has no accounting transactions.
There are two main situations where owning a dormant limited company can be useful for start-ups and small business owners;
All limited companies in the UK must submit an Annual Return form (AR01) to Companies House every year.
The Annual Return provides a snapshot of general information about your company, including details of directors and company secretary if you have appointed one, the registered office, share capital and shareholdings.
There are around 2.8 million sole traders in the UK. It is the most popular, and simplest, way of starting and running a business.
In this guide, we take a look at what exactly a sole trader is, the key things you need to know about becoming a sole trader, and whether it is the right business structure for you.
When you form a new limited company, one of the three documents you need to submit is the Articles of Association.
The other forms you need to submit to Companies House together with the Articles of Association are; Form IN01 and the Company Memorandum of Association. You can read more about what information is provided by these forms in our dedicated article here.
One of the first tasks you will have when starting up your business will be to decide whether to set up a new limited company, or become self-employed. If you choose to go self employed, this could be either as a sole trader, or as a partner in a partnership.
The different business structures each have their own advantages and disadvantages, so it’s vital you understand what each offers you. Working out which option best suits you, and your new business, can take a little time but it is an important decision, and one that can have major ramifications over the years ahead, so you do want to choose the business structure that best suits your circumstances.
Here we look at some of the differences between working as self employed and setting up a limited company;
The Memorandum of Association is one of the three documents you need to complete when registering a new limited company. The other two items you need to submit are Form IN01 and the Articles of Association.
One of the great advantages of trading through a company is to take advantage of ‘limited liability’. This means that, unless you have personally guaranteed a liability – for example to a bank or landlord – then as a director you are not responsible for the company’s debts if it goes bust.
If you are thinking of forming a new limited company, you should be aware of the legal requirements you have to meet as a limited company director, on behalf of the company.
If you want to set up a company, you can form it yourself via Companies House, use a formations agent, or an accountant will typically be more than happy to take care of the incorporation process on your behalf.
Each year, all UK registered companies are required by law to complete and submit an Annual Return to Companies House. This form provides a snapshot of relevant company information at the time of submission.
As long as you comply with the relevant rules you can call your company whatever you like, provided that no one else is using the name already. However there are some restrictions that you need to comply with.
Over 1.3 million businesses currently operate as private limited companies in the UK, compared to nearly 3 million sole traders, and around 450,000 partnerships.
Incorporation is the process of creating a company structure – a new legal entity which is distinct from the individuals or shareholders who formed it.
Board minutes are a vital part of a successful business. They ensure directors are upholding their duties and act as a reminder for decisions made during board meetings.
As well as this, they can be important to provide information to directors who were unable to attend the meeting, new directors and, if need be, aid in cases of litigation.
A limited company can have many classes of shares. These can be ordinary shares, preference shares and redeemable shares. The articles of association usually set out the rights of these shares while allowing the directors to issue shares with such rights and restrictions as determined by ordinary resolution.