A limited company is an entity that has a separate legal personality from its shareholders. This means that the assets and liabilities of the company are separate to the assets and liabilities of the shareholders and a company can enter in to contracts in its own right. A shareholders liability in respect of a company is limited to the value of the shares that he/she has purchased, or agreed to purchase, from the company.
Limited companies must have unique names, this means that choosing a name can be difficult, but you do have the peace of mind that your trading name is reasonably protected. Even if your company is dormant, no one can register a company with the same name as yours. There are also rules regarding similar names, and sensitive words or expressions that cannot be used, or require justification, so be wary.
Limited companies also carry a perceived status over that of a Sole Trader. It is seen as more official. However, a limited company requires significantly more transparency than a Sole Trader, including the public filing of your annual accounts.
Limited companies are taxed under corporation tax as opposed to the income tax that Sole Traders are subject to. This may be a benefit, but we recommend you speak to your accountant to confirm it is the right structure for your business.
Limited company formation
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