What are the advantages of forming a limited liability company?
When you form a limited company, you gain a lot of benefits that you don't get as a sole trader. It's not only a tax-smart method to manage your business; it's also a wonderful strategy to limit your personal liability and boost your consumer credit. Additionally, it may open up new opportunities for work that you wouldn't have had access to as a single trader, such as some contractor roles.
One of the drawbacks of running a limited business is the amount of paperwork involved; however, with the help of this tutorial, we'll cut through the jargon and give you just what you need to know.
If you're not sure if a limited company is suitable for you, read our comparison of the differences between limited companies and sole traders to see which business entity is best for you.
If you have more essential things to do than deal with extra paperwork, you can always use one of our accounting Firms packages, and we'll take care of all the forms and applications for you.
How to Form a Limited Company: A Step-by-Step Guide
We'll go into the nitty-gritty of how to form a limited corporation in this part. We'll highlight anything you should think about before taking action for each stage.
1. Determine the type of limited liability corporation you require.
You must determine what type of limited company you will form while forming your limited company. You can pick between two types.
- Public Limited Companies (PLCs)
- Private Limited Company (LTD):
2. Picking a company name
Once you've decided to form a limited company, you'll need to come up with a catchy name. Choosing a name is more than just an administrative duty; it's an opportunity for you to come up with a clever and distinctive brand to show off to your customers. Don't just pick the first one that comes to mind; spend some time thinking about it. Instead, have a good time with it and come up with 20-30 different names. You don't have to make them fully different; you may just modify the word order or a single word here and there. This is how advertising agencies handle name briefs, and it's a good method to refine your ideas.
3. Decide how you want to set up your limited liability business.
Now that you've decided on the perfect name for your firm, it's time to take the plunge and register your business. There are a couple of approaches you can take.
Directly register with Companies House — internet filings cost £12 and mail submissions cost £40. If you go this path, you'll have to handle the majority of the administrative work yourself.
Use a third-party service – An accountant or a business formation agency can assist you with the application process, greatly reducing the administrative strain. A professional accountancy service/company formation service can help you with accounting advice, filing duties, and other administrative tasks in addition to the application itself.
