New Limited Company Set Up

The Pros and Cons

When setting up a Limited Company there's a lot to keep in mind, whether it's your first time or if you're an old hand and developing your next venture.

Call us on 01233 653006 today.

If you've been a Sole Trader and you're looking to form a Limited Company now, then there are some key differences to be aware of in terms of regulations. It can feel like a headlong leap into the Twilight Zone, but don't worry, RIFT Accounting has every step of the way mapped and signposted.

We can get everything set up for you on your behalf, from choosing and registering your company name to filing your accounts and helping you to use your accounts to grow your business. All it takes is one phonecall to get started.

Becoming a Limited Company could:

  • Save you personal income tax.
  • Protect your personal assets.
  • Improve your business prospects and earning potential.
  • Allow you to deal with larger companies.

If you take advantage of our services, we'll help you do all of the following as part of our monthly fee:

  • Set up your Limited Company.
  • Register your company for PAYE (if needed).
  • Register your company for VAT (if needed)
  • Advise you on the requirements of Companies House and file all necessary paperwork.
  • Deal with HMRC on your behalf.

The legal responsibilities of Limited Companies and Sole Traders are not the same. RIFT Accounting can help you make sure you stay on the right side of the law.

Your Responsibilities as a Limited Company 

When you create a Limited Company, you're breathing life into something. You feed it, you keep it healthy and if the conditions are right you get to watch it mature and grow. Essentially, you treat it like a separate person and, weirdly enough, the law does too.

Once you're set up, all the protections of being a Limited Company start to kick in. For one thing, unless the company does something shady like trading while insolvent, Shareholders can't lose more than the value of their shares and Directors aren't personally responsible for company debt. However, if they have taken out personal guarantees or loans to fund the business, these are still payable.

This protection, of course, comes with an entire marionette's worth of strings attached. Just reading through the list of responsibilities that come with forming a Limited Company might make actually building that robot-monster you've been dreaming of seem like a cakewalk by comparison. Don't panic, though - here's where RIFT Accounting really gets going. Teaming up with us means we can:

  • Advise on your statutory accounts for Companies House and HMRC.
  • Complete your Company Tax Return on time every year for you.
  • Help you with filing your Annual Confirmation Statement each year for Companies House.
  • Calculate the VAT payments you will need to make.
  • Complete your personal Self Assessment return on time every year for you - and for the other company Directors, if you wish.

As any good mad scientist knows, whether you're building a monster or a robot (or a robot-monster, if you're really ambitious), creation brings with it a measure of responsibility. If your freshly activated masterpiece snaps its chains and throttles a pitchfork-wielding villager you should expect some consequences - although you might be a little more protected than you'd think.

Contact us and let's build ourselves a robot-monster!

Becoming a Limited company: The Up-Side

  • A Limited Company has a separate legal identity from its owners and Directors. Shareholders normally have no personal liability beyond the amount they paid for their shares.
  • There's a deeply engrained perception that a Limited Company is more trustworthy and professional than a Sole Trader.
  • Because the company owns the assets of the business (equipment, buildings, etc.), it's usually much easier to sell a Limited Company than a Sole Trader business.
  • You could raise funds from investors by issuing shares.
  • There's an opportunity to give shares to others, such as family members, so ownership could be passed on in future years. There are potential tax benefits to this, too.
  • There is much more opportunity to minimise your tax and National Insurance payments when you own a company.

Becoming a Limited Company - The Down-Side

  • There is less privacy. As a Limited Company, members of the public will be able to see the identity of Shareholders and Directors, along with details of your company assets.
  • Administrative expenses will be higher. To comply with company law and tax rules, there is a lot of paperwork that needs to be prepared and submitted by strict deadlines.
  • Professional accountancy services are normally required to assist with the preparation and filing of accounts and tax returns. This is what we're here for.

Sole Trader or Limited Company?

You may have heard that it's generally considered to be a little easier and simpler to set yourself up as a Sole Trader. This is true and it will be the best route if your business is very simple and your turnover intended to stay low.  If that is the right set up for you then we can get your sole trader business off the ground and running just as easily.

However, there is more to consider. If the whole thing comes crashing down around a Sole Trader's ears, there's no limit to your liability. Larger companies may not want to work with a Sole Trader, and when you start to earn a decent income you could actually end up paying more tax and National Insurance than if you were a Limited Company - which is pretty close to a perfect definition of insanity.

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