Buy Limited Companies

Now let us take a look at Ltd Companies and their pro’s and con’s.

We have discussed Sole Trading, but which comes off better when comparing the two and which road should you take?

When you are setting out to form a Ltd Company where shall you start? And what are the advantages?

You have to go through a government agency called “Companies House” before you have officially set this up. They are the only people in the UK who are authorised to give you your official documents to certify your Ltd Company has been set up. This includes the certificate of incorporation, which is vital to prove you have purchased your Ltd Company and it has been accepted via the correct procedures. But going through companies house can take some time and there is a small charge.

You also first need to think of a name that you would like to call your Ltd Company, as only one Ltd Company name can be registered on the index at any one time. So do you have a name in mind? Great! As long as no-one else has that name you should be able to have your company formed and start trading, then I can tell you about the brilliant advantages of setting up a Ltd Company.

But now I bet you’re thinking, “But I can’t really be bothered with all of the hassle of getting in touch with companies house and going through a load of boring forms, forms which I know nothing about!” There is a way round this! Yes, you can have a Ltd Company and still reap the advantages but let somebody else set it up for you.. But who?

Well there are lots and lots of different companies on the market which we call “Formations Agents”. Formations agents basically liaise with Companies house and they do all of the work for you for a set fee. After this there will be no further costs. And as you need to pay a small charge to Companies House anyway, even if you were to set up the Ltd Company yourself, then you haven’t really got anything to lose.

Plus the formations agents usually have set packages which come with lots of advantages such as free meetings with accountants. They can set all this up for you too.

Now let’s talk about the advantages. In my mind there are two deal selling points when talking of Ltd Companies.

Number one: You are not liable for any debts that the company may produce or for even the company itself. The Ltd Company stands on its own two feet with its own name and if the worst comes to the worst and you have any outstanding debt.. you can walk away from it at any time. You and your home, car, bank account are not responsible for this. The government or Inland Revenue or big bailiffs can’t come and seize your property by law. They can only take what belongs to the company and has been purchased by the company. For example if you have bought office furniture, then this is accountable for. And it can be taken.

Number Two: Taxes! You can save a lot of money by claiming back tax. You can do this by keeping receipts and keeping them in a safe place. Then file them with your accountant. You can keep the tickets that are a receipt for parking that you display on your dashboard for example. And why not, if you’ve been to a meeting where you’ve had to pay for petrol and park your vehicle, why shouldn’t you be able to claim this back to cover your business costs?

These are two great examples of how taking the time to set up a Ltd Company can benefit you. Perhaps you like the sound of sole trading more, it’s your business, now you have the facts you can make an informed choice!

So if you are setting up your own business, no matter what it may be, and you’re really excited about the future.

You know your trade and the business seems to be coming in nicely, but how do you control it all at your end from a business point of view? Do you declare yourself “Self Employed”, or do you set up a Ltd Company?

Can you simply pay cheques from an employer into your bank account? Is that even legal? And all the time this is happening you’re getting advice from people left, right and centre who aren’t really qualified to be doing so and have on occasions got their wires crossed!

So let me spell out a few facts and examples for you so we all know where we stand!

The most straight forward and simple way of setting up your new business and a small quantity of formalities is by becoming what we call a “Sole Trader”! The only people you need to inform of this is the Inland Revenue, just tell them that you are self employed and they will pass you the relevant information through their booklets which are easy to swallow. The only reason why you have to declare it to them is because they need to know what is happening with your tax and national insurance issues. You need to contribute to this (as long as you are earning) and the Inland Revenue need to keep track of where you are up to.

So if you decide to set up as a sole trader you are then fully in control of your business and you are responsible for everything that your business incurs. All of the management decisions will be yours. And every single penny of the profits will be yours. You need to keep accurate and legitimate records of all of your incomings and outgoings for your tax and Value added tax too but these records are for your eyes only. They are not for anyone else to look at (or in other words, it’s not compulsory to have them on any kind of public display!)

This may sound great, but the downside is: Any problems are yours too. Which means if your business does not go to plan or fails even, then you are liable for any debts that have mounted up and your property can be seized in order to repay those debts.

This is all assuming of course you are in business on your own as a sole trader. You could always form a partnership if there were two, or even several of you involved. This is in essence totally the same as being a sole trader only you share the responsibilities and profits amongst yourselves. (You also share the debts of this partnership too and again, all partners of your business will be liable should any debts mount up. Sometimes you can make this a bit more formal by drawing up a “Deed of Partnership” as an official document.

This is not a legal requirement in any way but if it is place then it can be amazingly useful to resolve issues or maybe disputes that happen between partners. (This is a regular occurrence in terms of the profit shares!)