Limited Company (LC)
Candlefocus EditorIn terms of taxation, limited companies generally have the advantage of distributing income among shareholders in a more tax-efficient way than other forms of business ownership. As shareholders are taxed on their personal earnings, they can limit the amount of tax they pay by structuring the revenue in a more advantageous way.
In terms of establishing the company, an LC requires more paperwork than other forms of business ownership, such as a sole trader or partnership. Companies House administers the filing of documents for all limited companies registered in England and Wales, and the formation process involves a number of crucial steps. These include registering with Companies House, naming the directors, issuing the shares and appointing officers. Companies House must approve the certificate of incorporation and articles of association before the company can legally begin trading.
As an individual or group of individuals, forming an LC rather than a different form of business structure allows for easier growth and development, as well as investment diversification benefits. Companies with limited liability are also better able to obtain capital, as creditors and banks may be more willing to lend money to a company with limited liability versus to individual business owners who have unlimited liability.
When done right, forming a limited company offers many advantages to business owners and investors, including personal asset protection and a more tax-efficient income structure. Furthermore, the paperwork and compliance requirements associated with forming an LC may be a major factor in determining whether such a structure best fits the requirements of a particular business.
Overall, a limited company is a popular business structure known for its assurance of personal liability protection, limited taxes and distributed profits, as well as potentially better opportunities for acquiring capital and investment diversification. With the right legal advice and assistance, forming a limited company can help any individual or group of individuals to set up and develop a successful business.