If you’ve got a great idea for a business that you’re now ready to move forward with, one of the first (and most important) decisions that you’ll need to make is; what business structure to operate as?
In the UK the two most popular options are to register your company with Companies House (AKA register a limited company) or operate as a sole trader. Here we’re going to look at the benefits if you choose to register a company and look briefly at how the company registration process works.
If you choose to register your company…
You pay less tax – probably the most obvious advantage of having a limited company is that you’re likely to pay less tax than a sole trader would.
You have limited liability – this means if things don’t go to plan, your personal property (including any actual property) isn’t at risk. You’re only liable to pay out the value of any unpaid shares that you have.
Your business name is protected – Companies House do not allow duplicate names on the register, therefore if you register your company you’re stopping anyone else from forming a limited company with that name.
You’re more likely to get funding – When compared with sole traders, limited companies are more likely to secure lending – thanks in part to the fact that a limited company separates you as an individual from the business – it’s a separate entity.
So there are some of the benefits of company registration, how do you register a company? Quite simply.
Limited companies can be formed directly with Companies House – the UK’s registrar of companies, or through a formation agent. Companies House offer a ‘no-frills’ formation with a basic company formation and nothing else – whilst a formation agent – for a little extra money can form the company and also offer associated services such as a registered office address.