From being your own boss to receiving more take-home pay, there are many advantages associated with setting up a limited company. So, is this the right option for you, and what can Brookson One do to help?
This term refers to companies that have a ‘limited liability’ status, meaning they are legal entities in their own right. They are owned by shareholders but run by directors. If you have your own limited company, you are both a shareholder and a director.
There are various advantages associated with this type of setup. For example, you will not be held personally liable for any losses made by the business. This gives you extra financial protection if things don’t go your way. It’s very different to being a sole trader. As a sole trader, you are held personally responsible for any business debts.
Limited companies may also benefit from certain tax advantages. In addition, because these companies are distinct entities from their owners, it’s sometimes easier for them to secure investments and loans.
Limited companies also exist beyond the lives of their shareholders. So, if these people resign or retire, the business continues to exist, providing greater security and continuity for employees.
All limited companies in the UK must be registered at Companies House.
In the UK, a large number of businesses are run as private limited companies. One of the crucial differences between setting up a private limited company and setting up a public limited company is the fact that the shares of a private LTD company can’t be bought or sold by members of the public. The shares of these companies are usually sold to family or close friends, and they have to be sold with the agreement of shareholders.
Although they share many characteristics, a public limited company (PLC) is different to a private limited company (LTD) in a number of key ways. If you set up a PLC, you choose to raise capital by offering shares to the public. This means that shares in the business can be bought or sold by anyone. This can happen through an initial public offering when the company is first set up, privately via gifts, sales or brokerages, or on a stock exchange.
However, contractors are unlikely to set out as PLCs. They are more likely to be private limited companies.
When you’re setting up a limited company for contracting or other purposes, there are a number of steps you’ll need to take. Firstly, you’ll have to choose a name (in line with the rules for company names) and check that it’s available for you to use. You’ll then need to select your director(s) and, in the case of a PLC, a company secretary. Once you’ve done this, you can decide who the shareholders or guarantors will be.
At this point, you’ll have to prepare documents agreeing how you will run your company, including a ‘memorandum of association’ and ‘articles of association’. You will then need to check which company and accounting records you need to keep. The final stage is to register your company.
If all this sounds a little daunting, don’t panic. With more than 20 years’ experience in providing tax, accountancy and support services to over 90,000 clients, at Brookson One we make this task quick, simple and stress-free. Our setup process can have you up and running within 24 hours.
As mentioned previously, to set up a limited company you need to register all the details with Companies House - and as part of this, you will be required to appoint a director who is responsible for running the business.
Brookson can complete your company registration over the phone in around five minutes.
The information sent to Companies House must include the company name and registered address, at least one director, at least one shareholder, details of the company's shares and rules about how the company is run.
We will assist you in opening a business bank account with one of our exclusive partners - Barclays, RBS, HSBC or Zempler Bank. Our systems talk to each other and gives us the ability to receive electronic daily updates of your business bank account allowing us to advise you based on real time information.
Once you're incorporated and have a business bank account set up, you can effectively get stuck in to running your company. Through our business partners, Kingsbridge Contractor Insurance, we can provide you with a business insurance package specifically designed for the needs of contractors, freelancers and self-employed professionals, so you do not end up paying for anything you do not need. Their comprehensive coverage starts from as little as £34.01 per month.
Our free guide is a great starting point if you’re looking at setting up a Limited Company and want to quickly cut through the jargon to help you understand everything you need to consider.
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