Should I become a limited company?

You may have started up your business as a sole trader and not given it much thought to whether you should become a limited company. As your business develops you may find people advise you to change this. Ultimate you need to decide for yourself what’s right for you. Here are some thoughts to help you reflection to whether you should think about moving to becoming a limited company.

  • Do you want your business and personal finances to be legally separate?

As a limited company you have limited liability. This means that your personal assets can’t be taken in order to pay debts, and the company’s shareholders will only be liable for any debt the company accrues according to the levels of their own investment and no more.

  • Do you want your business to continue without you?

A limited company to yourself, which has its advantages such as the company will exists beyond the life of its members, and the business entity will pay its debts not you.

  • Do your clients and suppliers prefer working with limited companies?

Limited companies have stricter monitoring and reporting of their accounts. They also have their details and accounts published publicly, this means that it is easier for potential clients or investors to investigate you.

  • Are you ready for the paperwork and accounting?

There are slightly more restrictive rules governing the accounts and bookkeeping of Limited Companies. This is something that holds many people back from switching to a limited company – however if you get advice and support from a good bookkeeper you can make sure you don’t get into trouble.

At Holy Brook we are happy to talk to you about your options, if you need more information and advice, please feel free get in touch.

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