Setting up a limited company – The Benefits
18 November 2018
Setting up a limited company
Setting up a limited company has plenty of advantages that may be more worthwhile than going alone as a sole trader. Here are a few reasons why you should set up a limited company.
You will be much more secure with your finances. You are fully protected if anything should go wrong and the implications will not be put on your shoulders. If you were self-employed, you would not have any real financial security. It is not the individual who would take the blow; but the limited company, which gives you a bit of breathing space from the business itself. In the highly unfortunate case of the business collapsing, your own finances and properties would not be affected, which gives you a bit more stability within your personal life.
You will pay far less tax than if you were a sole trader which is a great benefit. The tax rate that you would be paying is approximately 20% at the current time, and will drop even further by 2020 to around 17% compared to 40% for sole traders. A limited company may pay through loans, dividends and PAYE; saving you huge amounts of money when it comes to paying tax. Therefore, you are able to keep more money that you have earned through the business.
A company name
One of the great aspects of setting up a limited company is that you can have your very own company name. Your name can become highly recognisable, making your business appear more professional to others who may collaberate with you; especially larger companies who may only do business with trade names. Don’t cut yourself short from opportunities; if you are looking for big collaborations and recognitions, change from a sole trader to a limited company.
For tips on choosing a company name check out Forbes’s Nine Factors for finding the right name for your business.
If you would like any further information on limited companies or company formations, please visit our website or give us a call today!
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Brendan Corr, Corr & Corr Chartered Accountants