By implementing the process of company incorporation, you can register your new or existing business as a limited company. According to the Companies Act 2006, no business can operate as a limited company until incorporated at Companies House. If you start your small business as a sole trader or partnership, then it is preferred to incorporate your business. Here we discuss some of the advantages of company incorporation that might be helpful for you while starting your business in Uk as it offers many legal and tax benefits.
Small business incorporation have a benefit to protect your business name, where you incorporate your business in that state or province no other business can use the same name that you reserved. In case your business incorporation is federal then you can use your business name throughout the country. You can’t protect your identity if your business is not incorporated, anyone can use the name same as your business name.
Another advantage of Company incorporation is that if company face any lawsuits or legal actions, the personal assets and finance of shareholders or owners are safe, they are only liable to pay up to the value of their shares. Limited company is secure in losing everything if it faces financial difficulty as compared to sole traders and partnerships as their assets are at stake to pay the debts of the business.
You can enjoy tax benefits as a limited company in contrast to the partnership or sole proprietorship. Incorporated Companies have to pay corporation tax on all its profits which is lower than income tax that sole trader & partnerships have to pay. You can take a small salary being a director or shareholder of a limited company which helps you to increase your earnings from the business out of its profits. You can reduce the amount of National Insurance Contributions (NICs) that you will pay to HMRC because limited company dividends are not subject to NICs.
An Incorporated limited company has a separate legal entity from its owners, directors and promoters. It enables the companies to own, buy and sell property, and being held accountable for all the actions. Owners, directors and shareholders may change over time, but the corporation will survive. Its existence can only end up by the order of court or companies registrar.
Limited company for contractors may know that some business or companies only feel reliable to work with a corporation than an unincorporated business because of liability issues. Your business can grow successfully by having “Inc”, “Corp”, or “Ltd” after your business name as it communicates, represents or considered to have more stability.