Limited Company
A limited company has its own legal identity and is separate from the people owning and running it. This means as limited company the business is responsible for its financial liability and debts, not the directors and shareholders. A limited company will have a director and at least one shareholder.
Limited companies are subject to strict reporting and financial responsibilities and as a director of the limited company you have several statutory duties and financial obligations.
Administration and Tax Responsibilities
A limited company needs to be registered or incorporated with the Companies’ house with suitable name and address. Limited companies pay Corporation Tax on all annual profits to HMRC and must complete an annual Corporation Tax return.
The company’s annual accounts must be filed at Companies House and a Confirmation Statement must be submitted annually to ensure the Companies House is up to date with any changes incurred to the business. All employees of a limited company must also pay income tax and NICs on any income they receive. There are high requirement and range of unique challenges and responsibilities to run a business as a Limited company that can be overwhelming to the business owner. Therefore, with our team of experts at SEARS Accountants, we can provide guidance on the rules regarding the reporting and financial responsibilities and assist you with all the requirements from registering the business name to Companies House, to filing and submitting annual accounts, Corporation Tax Return, Confirmation Statement and dealing with all the correspondences with HMRC and the Companies House.
Limited companies pay Corporation Tax on all annual profits to HMRC and must complete an annual Corporation Tax return. The company’s annual accounts must be filed at Companies House and a Confirmation Statement must be submitted annually to ensure the Companies House is up to date with any changes incurred to the business. All employees of a limited company must also pay income tax and NICs on any income they receive.
There are high requirement and range of unique challenges and responsibilities to run a business as a Limited company that can be overwhelming to the business owner. Therefore, with our team of experts at SEARS Accountants, we can provide guidance on the rules regarding the reporting and financial responsibilities and assist you with all the requirements from registering the business name to Companies House, to filing and submitting annual accounts, Corporation Tax Return, Confirmation Statement and dealing with all the correspondences with HMRC and the Companies House.
Advantages
- One of the biggest advantages of running a business as a limited company is that your liability is limited, and you are not personally liable for your business liabilities and debts.
- As a limited company your personal assets are secure when your business is at loss.
- As a limited company your professional status will be considerably better when you start trading which will add to credibility to your business. Although your ownership responsibility and management of your business will remain the same.
- As a limited company you will be able to raise your business capital by issuing new shares or you can easily secure loan from a bank without the need for the director to give a personal guarantee.
- As a limited company you will pay only 19% tax (as of 2021) on all your business profits, and you can reduce your NICs.
Disadvantages
- As a limited company you must register with the Companies House and pay for registration fee.
- As a limited company your business administration and accounting requirements are more complex and time-consuming.
- There are certain restrictions regarding the company’s name.
- Your certain personal and business information can be made available for the public inspections.
- All decision regarding to the business must be consulted and agreed with all the directors and shareholders.