4 min read
As a business owner, there are many different ways to organise your company. Each distinct way offers its own advantages, and the type you choose will depend on your specific situation.
Many small businesses start out as sole traders or sole proprietors and these are the simplest to set up.
However, as your business grows and develops, you may need to choose a slightly different structure to get the most out of your company and to protect yourself from possible liability.
You can gain a lot of benefits from registering your business as a limited company, and it’s also possible to incorporate your business in another country.
Some countries have favourable laws and regulations that offer better advantages than others...
The UK has become a great destination for startups due to flexible regulations and a growing number of businesses are incorporating here.
A limited company is a type of business structure where the company is considered its own legal entity.
This means that the company’s finances are separate from your own and that it’s legally separate from its owners and anyone else who runs it.
A limited company can also own assets and keep any profits that it makes after tax. There are two main types of limited companies:
Limited by shares companies are those that make a profit and are split into private limited companies (LTD) and public limited companies (PLC).
Private limited companies are one of the most common structures for small businesses, but many larger companies also use this structure. They’re privately owned and cannot offer shares to the public.
John Lewis Partnership, Virgin Atlantic and Anglian Water are some examples of private limited companies in the UK.
On the other hand, public limited companies can raise shares to the general public in order to raise finance. A PLC must have issued shares with a value of at least £50,000 in order to trade on the stock exchange.
It is more typical for larger, more established businesses to have this structure. Some examples of public limited companies in the UK include easyJet, Marks & Spencer Group, and Barclays.
Limited by guarantee companies are typically not-for-profit.
Profits made are usually re-invested into the company, and rather than shares and stakeholders, these companies use guarantors who are used to pay the company’s debts.
The company will lose its right to apply for charitable status if any revenues are paid to the owners.
Sports clubs, worker's co-operatives and membership clubs are some examples of limited by guarantee companies that aren’t charities.
But all limited companies share the following key features:
Owners and shareholders of a limited company are not personally accountable for any losses or debts incurred by their company because a limited company has separate finances and is legally distinct from its owners.
One of the key benefits of a limited company structure is limited liability, which means that shareholders are only legally liable for the amount of their initial investment and can only lose the money they invested in the company.
The UK is one of the greatest hubs in the world for startups because of the country's strong entrepreneurial culture and the availability and quality of venture capital funding.
Being incorporated in the UK offers its own benefits too. Some of the advantages of your company being incorporated in the UK include:
The reduced personal liability of the business owners is one of the main advantages of forming a limited company in the UK.
This means that, provided the directors have done appropriately in managing the company, all personal assets of the people responsible for the firm will be protected.
In other words, your assets and finances will be safe even if the corporation encounters financial or legal difficulties. This is so because a limited company is a distinct legal entity.
More often than not, registering as a limited company can have tax advantages depending on your circumstances. Instead of paying income tax, limited companies pay corporation tax.
This implies that when it comes to tax preparation, you have more alternatives and freedom. If your company doesn’t conduct business or trade within the UK, corporation tax can be levied, saving your business costs.
Business owners have more options when it comes to raising capital. This is due to the ability to sell shares to investors.
If your company is a public limited company, you’re able to sell shares, although this option isn’t available for private limited companies and companies limited by guarantee.
Additionally, registering as a limited company will open up access to loans that are only available to incorporated businesses.
If you set up a limited company, you can put pre-tax income into a company pension scheme, providing benefits for employees and making your company more attractive to work for.
A limited company will often inspire a higher degree of trust in consumers and clients when compared to a sole trader. Even if the organisation and business practices of your company don’t change, being incorporated can improve the credibility of your business.
Limited companies often need to follow more regulations which contribute to the credibility of your business. Of course, the UK is one of the best jurisdictions in the world, if not the most reputable for this reason.
Setting up a limited company in the UK is easier than you might think. The entire process can be done online and there’s no need for your company to have a physical presence in the UK.
It’s very fast, with most limited companies set up within a few business days, and there’s no minimum capital required. We make it even easier for you to set up your own limited UK company with Launch.
To set up a limited company normally, you would register on Companies House either online or by post.
With Launch, you can easily set up your own limited company in the UK in just a few simple steps, even if your place of business isn't the UK. One of the perks of our integration with Companies House.
And avoid the bear traps founders often fall into by using our flexible equity framework. You can also use the platform to integrate an existing UK limited company.
With Launch, it's easier than ever to benefit from owning a UK-limited company. Book a free consultation to find out more.
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