Company Incorporation

Introduction

There are a number of reasons why you may choose to incorporate your business.

The advantages are as follows.

Limited liability

The personal liability in a company's shareholders in the case of business failure is limited to the share capital which they have subscibed and to any personal guarantees they have given. This personal protection may not apply in cases of wrongful trading.

Flexibility

Limited companies can be more flexible than partnerships in the division of ownership, management and distribution of income.

Credibility

Limited company status can increase the credibility of a business.

Income Tax Mitigation

It is sometimes necessary to trade as a limited company to avoid being treated as an employed person without the ability to obtain tax relief on expenses.

Capital Gains Tax Mitigation

It is sometimes advantageous to commence a new trade as a limited company in order to set off realised capital gains.

The disadvantages are as follows.

Bank finance

It is unlikely that the company will be able to obtain bank finance, at least initially, without giving personal guarantees.

Accountancy and audit

A limited company is obliged to prepare accounts in a statutory format which may be more complicated than the accounts of a sole trader or partnership.

Administration

A limited company requires more administration as there is regular requirement for the filing of information about the company's affairs with the Registrar of Companies.

Taxation

The company is subject to Corporation Tax and has to make a Corporation Tax Return and returns of any dividends paid.

We can arrange the incorporation of a new company for your business within ten days.

We normally complete all of the initial entries in the statutory books for you and make all relevant filings with the Registrar of Companies.

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