Self-employment as a sole trader is one of the easiest and popular ways to run a business in the United Kingdom. There are several advantages to having a limited company. The first thing you need to do to get started is by informing the HMRC about your self-employment status along with the business activities by presenting the annual self-assessment tax process. In this article, we will discuss such advantages that are eminent to a limited company.
Advantages of a Business as a Limited Company:
These are the major advantages of a business that you can get for having a limited company. There will always be pros and cons of being self-employed, so you need to choose the best possible option according to your preference.
1. Tax:
This is the first and major advantage of having a business as a limited company, as you can pay less amount of personal tax. There will always be tax benefits of forming a company in the UK according to the UK tax corporation. According to the UK corporation tax, the limited company profits are currently set at 19%. So, if you are having a share in this limited company or you are the director then you can always have a small amount as salary and rest of the payment as a dividend which will be not categorized in tax payment.
2. Limited Liability:
If you are running a limited company then it is confirmed that you are having limited liability. The basic meaning of limited liability is that you are not liable for any losses which are made by the business.
3. Distinct Entity:
The limited company is a completely different entity from its owners. Each and every asset in the company bank account will have complete ownership for the business only. So, company shareholders' interest is entirely separate from these assets. In simple words self-employed and the business will be treated as a single entity in the case of tax and any administrative reasons.
4. Funding:
Getting funding for any company is rather difficult, show the limited company and its owner will have less difficulty to secure finance of the business. Because the owner and the company are a distinct entity compared to the self-employed parts.
5. Naming:
It is mandatory to register the company with the company house, as a result, the name of the company will be protected according to law. So, this name cannot be used by anyone or anything in a similar field. If you are going as a sole trader then anyone can take on the same trade name. this could damage the Goodwill of the company and it can also be time-consuming for changing the name to a different one.
Conclusion:
Advantages are the basic need for each and every business in order to gain profit. We have collected complete information regarding the advantages of running a business as a limited company from different sources and entrepreneurs and posted them in this article for you. Share this informative article with others, so that they get to know about the advantages of having a business as a limited company in the UK.
