Buy Limited Companies

When you are about to foray into the world of business, it can be very confusing to know where you should turn. One of the primary differences can be between sole traders and limited companies, and there can be a number of implications to choosing either one of these. In this article, we are going to look at both of them separately, and conclusively decide which circumstances should determine the option you go for.

As the name suggests, a sole trader is a businessperson who runs their business alone. Once tax and national insurance has been taken out of the way, the profits (or indeed, the losses) that they make are theirs and theirs alone. This means that any debt which is accrued through a business’ activity is the responsibility of the sole trader, and they are liable for the repayment of what is due.

If you are itching to get started with a brand-new business, sole trading can be an excellent option for you because it can be quick to set-up, with there being few regulations to take into consideration before you begin transacting with your clients. It can also be easy to conclude your business if things don’t go the way you expected them to.

If you are looking to make progress into your business without having to take into account the thoughts and opinions of other people, this is certainly a route for you to consider. However, there can be a cap to how much you can do with sole trading, particularly if your business gets too big for you to handle.

Should your company become more ambitious, the risks that you may be taking could be too high for you to justify on your own. At this stage, undergoing the transition into a limited company could be wise – or, if you are starting out and don’t want to be liable on your own, going through the paperwork in order to make this happen could be wise.

In contrast to the amount of sole traders there are in the UK, limited companies are certainly in the minority. There are an estimated 1,150,000 limited companies in the UK – yet there are 2,800,000 sole traders.

If a limited company has to undergo legal action, the risk that the owners of the business may have are significantly reduced. This is because of the way that a shareholder’s personal assets cannot be touched when worst comes to worse.

There is certainly a lot more paperwork to be considered. For example, a limited company has to register with Companies House, the body which regulates all activity of businesses in England and Wales. The taxation used is Corporation Tax, whilst sole traders use self-assessment in order to determine how much money is owed.

Taking some careful consideration into which method is best for you before you start your business can ensure that you don’t have any nasty surprises during your time of set-up. If you believe a limited company could be better for you, it could be better to endure the paperwork early on instead of putting it off until later.

This entry was posted on Thursday, March 4th, 2010 at 1:05 pm and is filed under setting up a company. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.