We can help you take advantage of the most beneficial tax position for your business. Helping you minimize your commercial risk and maximise profits. A limited company is a distinct legal entity that is able to enter into contracts in its own name. The fact that the company is a separate legal entity from its owners is very important as it means that all the company’s liabilities are the responsibility of the company – not that of the directors and shareholders!
The only exception is if you, as director of the company, offer a bank or other creditor a personal guarantee to repay the company’s debt. In that instance you then become personally liable to repay the debt if the company is not able to.
What We Offer
- Manage tax, VAT.
- File your annual accounts, corporation tax returns, VAT, and PAYE.
- Give you great advice whenever you need it.
- Recommendation on tax efficient wages and dividends
The main advantages of setting up as a Limited company are:
- Limited liability – as explained above, the company is a separate legal entity, and this can protect your personal assets from business creditors if for any reason the company is unable to clear all of its debts and has to cease trading. Operating as such is especially useful if there are significant risks associated with your business activity.
- Due to the Limited Liability discussed above, companies look like a more secure prospect to investors.
- Status – the business artificially looks bigger and more professional.
- Succession of shareholders is more straightforward.
- Tax efficiency – trading as a limited company can be more tax efficient due to dividends not attracting National Insurance and the notional tax credit.
The main disadvantages of being a Limited company are:
- More cost – the professional costs for setting up the company and for preparing company accounts and tax returns can be higher than those you would expect to pay if you were self-employed. There are then additional costs involved with various Companies House requirements.
- Companies must file their accounts and various other documents on public record with Companies House, so companies have less privacy than unincorporated businesses.
- As a general principle, you tend not to have ‘mixed-purpose’ expenditure by a company; it either is for business purposes; or it’s not. And recognising mixed-use assets or expenditure can trigger tax charges on the relevant employees/ directors.
- Any losses generated by a company, belong to the company. Therefore, they cannot be utilised by the directors or shareholders.
- Audit requirement – If your company exceeds certain limits, or is in a particular trade sector, an audit may be required thus incurring further costs. We can advise on this, but most small companies will be exempt from annual audits.
PK Accounting Service is happy to discuss your individual requirements and undertake a proper risk assessment thus enabling you to decide on the best way forward for your business. Whether you proceed as a limited company or as an unincorporated business, our assessment will indicate the most beneficial tax arrangements available to you and help you to make sensible choices about how you can minimise your commercial risks.
For more information on accounting for Limited Company and to discuss your requirements please drop us a line using our Online Quick Quote Form