5 advantages of setting up a limited company

It is quick and easy

Setting up a limited company is easy and can be quickly started. The best part is you can get the entire process done online. Nowadays, you don't have to wait weeks or hours to start the paperwork from Companies House. You can start a limited company within a few weeks. You will likely get the approval in 5 minutes if all your paperwork is correct.

Starting a limited company can be cheap. It’s advisable to know the cost and expenses against the corporation tax. The introduction of the Companies Act 2006 helped in running the limited company easily. The government will continue to examine ways to provide well-run companies flexibility for running the business successfully.

Potential credibility and prestige

Starting a limited company ensures that the business is committed to responsible management. As a result, both supplier and customer get the flexibility of running the business successfully. Having the status of having a limited company ensures that your business is credible.

When you want to do business with larger organisations, they will only do it if you are a limited company. Setting up the limited company will provide a wide range of opportunities to people that won't be available otherwise. Moreover, these limited companies get extra accounting and reporting efforts that act as a credible opportunity.

The sole traders and partnership firms usually do not benefit from uniqueness. Once you register the limited company with Companies House, the name that you register for the business will be protected. Your competitors and others won't be able to use the name or any similar name as that of your business.

Various options for raising the capital

Sole traders and partnerships need to raise capital using their own resources. However, these limited companies can easily get the funds by providing new shares. The existing shareholders will get new shares or from new investors. However, the company will be able to provide shares to the respective individuals within the company and not to the public. Only the public limited company can only offer their shares to the public.

Creating one or more shares can play an important role in providing flexibility. You can tailor the rights for voting and getting control of the company. Furthermore, you will also receive dividends and extract capital when the company stops running. When the company is established, the new shareholders can also be introduced. You must also include pre-emption rights for protecting the rights of the existing shareholder.

There are various tax advantage schemes, such as Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These schemes are aimed at raising capital for companies. Apart from these, other grant funding options are available for businesses to set up the companies.

If the limited company is planning to borrow money from the bank, it may be able to get it at a lower interest rate. Moreover, you may also be able to get the loan without any approval from the directors. On the other hand, the sole traders will need approval from various authorities to secure the grants.

Starting a limited company in the UK is a smart move for any growing business looking to take the next step. With its numerous tax benefits, strengthened credibility and reputation, and legal protection for its owners, a limited company provides the perfect foundation for long-term success. Imagine the peace of mind you'll have knowing that your assets are protected and the increased confidence you'll have in presenting your business to the world. By choosing to incorporate in the UK, you'll be joining the ranks of some of the world's most successful and innovative companies.