When registering a company, there are many options to consider. One of the most popular company registration options among the modern businesses is setting up a limited company. Although a limited company is mostly associated with benefits, some drawbacks are also associated with limited companies. Therefore, before opting for a registration, it is important for every business owner to analyze both the benefits and drawbacks to get a clear insight. This article points out the advantages and drawbacks of setting up a company.
Setting up a limited company is exceptionally fast and affordable. To register a limited company, you should correspond with the Companies House (Companies House is the official body in the UK to regulate the limited companies). If the correct documentation is provided, you can expect the registration to complete within a couple of hours. Becoming a limited company will deliver you tax advantages when it comes to a field like contracting.
The most beneficial aspect of setting up a limited company is that the protection for personal assets; before the law, the business will be considered as a separate entity. Also, when you run a limited company, you can claim the potential business expenses.
Drawbacks of setting up a limited company
Despite the legal obligation of existing as a separate entity, limited companies demand the directors and shareholders to perform their duties. Aspects like sending annual tax returns, maintenance of precise accounting and documentation are musts of limited companies. Failing to send annual tax returns will cause the business to pay a penalty.
Also, it is compulsory for limited companies to notify all the changes take place pertaining to officers and shareholders, to Companies House.
So, before you move forward, you should carefully analyze all the facts, probably with the assistance of a company formation agent and pick the best option for you.