Thinking of Forming a Limited Company?
Despite the tax advantages of incorporation, running a limited company is not for everyone. There are duties required of Company Directors which exceed that of a sole trader.
There is a general responsibility to ensure that the company keeps proper accounting records which accurately reflect the financial position of the company at any one time (we can help by providing discounted bookkeeping software or doing the bookkeeping for you). You will also need to have board meetings of which minutes must be kept, again we can help in this respect. You must act in good faith and in the best interests of the company at all times. For an owner managed company, you will often have the position of shareholder, director and employee at the same time. You should wear a separate ‘hat’ for each role.
If you do not adhere to your responsibilities the consequences can be serious and include criminal penalties, civil penalties and/or disqualification as a director.
If you are prepared to listen to and act upon our advice then these responsibilities can easily be maintained, however if you are not prepared to do so then you will probably be better off trading as a sole trader, or through a partnership.
There are other factors involved in deciding whether to incorporate as a limited company, which include, but are not limited to:
- Taxation differentials
- IR35 issues
- The prestige and status that a limited company gives
- Limitation of liability (You and the company are seperate entities which means that, amongst other things, the debts of the business are seperated from you as an individual, subject to exceptions such as tax evasion);
- Additional accountancy fees for a limited company
- Associated companies
- Sale of business
- Future changes of legislation
The decision on whether or not to incorporate should be based on many factors though with tax saving being a prime concern for many, the limited company option provides a popular and attractive solution.
To find out more about how Dormer Finance Ltd can help your business, call us on 01268 888 450.