Here at A1 Professional Accounting, we help companies go from self-employed to limited companies. When it comes to deciding the next move for your business, all options should be carefully considered and weighed up. Many different factors will influence your companies next move including future growth plans, how you wish to be perceived by your customers, and the type of business you wish to run. Fortunately, A1 Professional Accounting are able to assist you through all considerations to ensure you make the right decision.
Many types of businesses often transition from being self-employed to a limited company, and for good reason. Fundamentally, a Limited Company is a type of business organisation where the owners’ assets and income are separate and distinct from the companies assets and income. Any type of company can be set up as a Limited Company across a wide range of sectors and industries including dentists, accountants, driving instructors, hairdressers, photographers, and many more types of businesses.
Now we’ve established the definition of a what a Limited Company actually is, let’s get into the main benefits of going Limited which will help determine if it’s right for your business…
The number one reason for transitioning or starting a company with a Limited identify is the fact that it’s much more tax efficient than alternate options such as operating as a sole-trader. Depending on how much revenue you make, operating as a sole-trader could put you out of pocket, especially if your cross the £85,000 per annum threshold. Fortunately, as a Limited Company, your company profits will be subject to UK Corporation Tax, which currently stands at just 19%.
Going Limited is also proven to help improve your credibility and create a more professional perspective to current and also new potential customers. Operating as a Limited Company is one sure way to truly give your customers and/or suppliers trust and confidence in your services and partnerships. In some industries, perhaps more than others, this is particularly important. In industries offering a professional service or where there is potential risk, it’s always best to be Limited.
Another major benefit of choosing to go forwards as a Limited Company is the fact that you can achieve easier funding as a result. Because a Limited Company is a separate legal entity for its directors, this provides much less risk to potential lenders of investors. Furthermore, as a Limited Company, you may also be eligible for the venture capital schemes such as; Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Scheme (SEIS).
As you transition to a Limited Company, you will also benefit from claiming more business expenses which will help to further reduce the amount of taxation owed. Anything that you purchase for your business that impacts your profits and bottom line, can be claimed back in business expenses. And as a Limited Company, you have more scope to do exactly that. Types of business expenses you will be able to claim for include;- software, phone bills, internet, travel expenses, accountancy fees, and more.
Setting yourself up as a Limited Company is no where near as expensive as you may have first anticipated. That’s right, registering your company as a Limited organisation costs as little as just £12. It’s really easy to do and accountants just like A1 Professional Accounting are here to help.
There are no disadvantages of such but certain businesses are more suited to going Limited than others. Going Limited can be slightly more complicated and be an administrative burden in order to enjoy the benefit of great tax efficiency. And of course, it can take bit of time to set up as a Limited Company as you will have to register through Companies House and provide them with all the information they require.
If you need advice, support or assistance from A1 Professional Accounting, please get in touch with our team today. We will be more than happy to offer business consulting to ensure you make the right decision for yourself and your business for the future. Call now on 020 3740 4055 or use our contact form.