7 of the Best Reasons to Register a Limited Company (UK)

From managing your tax to attracting outside investment, there are plenty of good reasons to register a limited company. And in this article we introduce you to our top 7.

1. Managing your tax

Limited companies pay corporation tax which is lower than the income tax paid by sole traders and partnerships.

As a director of a limited company, you can also take money from the company as dividends rather than a salary, which can be more tax efficient. A salary is subject to employee and employer National Insurance contributions, and you don’t have to pay this if you take a dividend.

What’s more, a limited company is able to claim more in allowable expenses and reliefs than a sole trader or a partnership. There are tax deductible costs which you can offset against a company’s profits, meaning you get to keep more of your money.

2. Protect Your Personal Assets

Many new businesses end up trading at a loss and need to borrow money from banks or in the form of stock on credit from suppliers. If the business can’t pay the money back it will be wound up and all the assets sold to pay back the creditors.

But, when you register a limited company, your personal assets, such as your house and car, be protected. That’s because limited companies are separate entities in the eyes of the law.

3. Attract Outside Investment

If you have a solid business plan, the decision to register a limited company could attract investors keen for a share of the profits.

As the company director, you have control over how you allocate shares and what influence the shareholders will have on how the company’s run. It’s an attractive option if you need an immediate injection of funds and business expertise.

4. Gain Exclusive Rights to Your Company Name

When you register a limited company, the name of your business is placed on the public register held by Companies House. That means it’s yours for as long as the company remains in existence.

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5. Polish Your Reputation

The decision to register a limited company (UK) demonstrates that your business is going to stick around. This should mean that suppliers will be more willing to extend you credit.

6. Build for the Future

If your limited company is funded by shareholder capital, you will be in a better position to plan for the long term than if you had sought loans from a bank. While shareholders accept that they might not see a return on their investment in the short term, a bank will be less patient.

7. Become a Serial Entrepreneur

Are you full of business ideas? Then why not register a limited company and sell it on when you get an attractive offer? This could be just your first company of many.

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