UK Company Formation

Key benefits of forming a Limited Company

• A limited company is a separate legal entity, which means that both the directors and the company have completely separate rights and existences.
• The liability of the shareholder of a limited company is limited to the amount unpaid on any shares issued to them.
• A shareholder cannot be held personally liable for the debts of a limited company.
• Creditors of a limited company can look to the company for payment, which can only be settled out of the company's assets; thus, generally, the personal assets of the shareholders and directors are protected.
• Once your proposed company name is registered as a limited company, the name is protected by law and no one else is allowed to use it in that jurisdiction.
• Operating as a limited company often gives suppliers and customers a sense of confidence in a business. Quite often, larger organisations in particular will prefer not to deal with non-limited businesses.

Many of the costs associated with managing and operating a limited company are no longer much greater than a non-limited business. Accountants and other professional advisers often have conflicting views on when they consider the benefits of being limited to outweigh the advantages of being self-employed. In general terms, at least from the perspective of taxation and accountancy, changes to legislation over the last few years have meant much lower costs associated with limited companies.

There is no obligation for a limited company to commence trading within any set time period after its incorporation. This means that the formation of a limited company is one simple and low cost method to protect a business name. Whilst this does not in itself give any rights to use of the business name, many clients form companies in anticipation of future development of new businesses or in order to protect the limited company name of an existing non-limited business for the future. Remember, no two limited companies can exist with exactly the same name.

See our notes on “Which type of company?” for a comparative guide to the various types of corporate entities. We have various packages to suit every need.

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