A limited company is an entity completely separate from those who own it and run it. At the most basic level, it is a legally recognized entity in itself.
Contractors go to all the trouble deciding which option is best for their business because choosing between an umbrella company and a limited company has a great impact. The process of choosing should not be difficult. Many contractors or freelancers who may initially have been umbrella, or in some cases 'Sole Trader' may find that setting up a Limited Company can offer the best long term solution for a number of reasons.
A limited company is an entity completely separate from those who own it and run it. At the most basic level, it is a legally recognized entity in itself. As such, the element of limited liability is the main attraction of this option. Operating in this way reduces the risk faced by shareholders or directors.
Opting for the creation of a limited company, while it does involve more legwork on the contractor's part, will be the most suitable option for many people for the reasons mentioned above. From basic elements like the legitimate registration of the company name, to the more in-depth aspects such as the completion of VAT and tax returns, and expense reconciliation's, the workload involved is considerably higher when operating as a limited company.
The advantages of Limited Companies
The first significant advantage offered is that they are 'limited liability' structures. This means that the shareholders of the company are not liable for its debts should it fail. In the case of contractors and freelancers the shareholder is normally the individual contractor - though ownership can be split between different people including family members.
LTDs have an existence in law in their own right - registering them is a little like registering a birth! The company is responsible for its own debts, has its own bank account and applies for loans and finance in its own right.
Unlike sole traders, limited company profits are subject to corporation tax whereas a sole trader will pay personal tax on any profits. Payroll and PAYE systems are however required to be in place to pay employees (the contractor). In general it is advisable to have an accountancy firm to deal with this responsibility for the company.
Who can set up a limited company?
Anybody can form one in the UK, regardless of their own nationality - remember the company becomes a legal entity in its own right. Any name can be used as long it is not already in use. They are registered in the UK at Companies House and the process is relatively straight forward and can be done by an individual.
Pharmacies and Bank Holidays
In the run up to a bank holiday the importance of pharmacies and the reliance of the public on their services, especially dispensing services has never been more apparent.
How do you go about setting up a company?
The question many ask is why set up a private limited company? This question is asked mainly because setting up a company is likely to involve more administration and higher costs then if you remain as a sole trader.
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