There’s a long held school of thought that goes something like: “Running a Limited Company may be tax efficient but what about all the paperwork and tax returns, and the costs involved in employing a decent accountant!?”
We’ve spoken to many contractors, freelancers and small business owners who’ve either had similar thoughts or unfortunate past experiences that prove the theory of running a Limited Company as being a pain.
Gas Engineer Mohammed Khanee gives a good account of how running a Limited Company can be headache-inducing in the wrong hands but incredibly easy in the right hands.
The benefits of setting up a Limited Company
Being the owner of a Limited Company gives you the complete freedom to run your own fully fledged business. You have complete control of branding, the potential to expand your business and pitch for work you may never get as a sole trader or umbrella company.
Also, the fact that you have limited liability gives you piece of mind that your home and personal possessions won’t be up for grabs if business suffers a downturn.
Finally, running a Limited Company gives you the advantage of being able to pay yourself in the most tax efficient way possible with dividends.
That’s enough of the advantages, now time for the practicalities…
Setting up a Limited Company
1. Choose which type of Limited Company:
* Private Limited Company (Ltd)
* Public Limited Company (PLC)
Most freelancers, contractors and small or start up businesses will opt for private as PLCs must have a share capital of minimum £50,000, at least two shareholders, two directors and a qualified company secretary. Note: Crunch doesn’t cater for PLC’s!
2. Form your company
The easiest way to do this is online. Crunch will deal with the incorporation process and get your company up and running in no time at all. Perhaps ‘no time’ is an exaggeration. But one of our customers DID take just two-and-a-half hours to form his Limited Company with us. As standard we’ll also take care of your online accounts and provide you with your own account manager… oh, and access to a team of accountants!
3. Completing the incorporation process
Companies House is responsible for all Limited Company formations in the UK. You can check out their website here. But as mentioned previously, we can take care of all of this for you.
Crunch will prepare the following documents that are required for the formation of a new Limited Company:
* Memorandum of Association – limited company name, location, business type.
* Form 10 – director’s names, addresses and registered limited company address.
* Form 12 – states that the limited company complies with terms and conditions of Companies Act.
* Articles of Association – outlines director’s powers, shareholder rights etc. (This is normally provided by the Company Act that sets up the Limited Company).
And that’s it. Your Limited Company is formed!