The legal and taxation regime for limited companies continues to change. The main rate of corporation tax commencing 1st April 2016 is 20 per cent.
A limited company model suits all types and sizes of organisations. It offers a number of benefits over the other forms of legal business structures. You may choose to register either as a commercial ('for-profit’) company limited by shares or a non-profit company limited by guarantee. Having limited status provides a number of perks which outweighs those available to the sole trader or contractor who works via the umbrella company route.
The following shows the advantages of being a limited company.
The principal reasons for setting up and trading as a limited company are limited liability, tax efficiency and professional status. Limited Company status also offers -
- Higher personal remuneration (salary & dividends)
- Separate legal identity
- Credibility and trust
- Investment and lending opportunities
- Protecting a company name
- Splitting income
The disadvantages of being a limited company -
- Must be officially incorporated at Companies House & a registration fee has to be paid to Companies House.
- Any changes to the company details must be notified to Companies House immediately.
- Company name is subject to certain restrictions.
- Not suitable for undischarged bankrupts or disqualified directors.
- Must disclose personal and corporate information on public record.
- Involves complex and time-consuming accounting requirements.
- May need an accountant to help with your tax affairs.
- Strict procedures for withdrawing money from the business.
- Annual accounts and a confirmation statement must be filed at Companies House each year.
- Company Tax Return and annual accounts must be submitted to HMRC every year.
- Must adhere to strict record keeping requirements, take minutes of meetings, record all decisions taken by the directors and shareholders.
- Number of company registers and records must be maintained and made available for public inspection at your registered office.