Starting a limited company is a relatively simple task. There are three ways to start a ltd company formation:
- Register a limited company on your own (the cheapest way to start a limited company, but it this is also the lengthiest);
- Go through a professional advisor such as lawyer or an accountant (the most expensive course to create a limited company);
- Use a company formation agent (this is the shortest and most affordable course to setting up a limited company).
How do Limited Companies compares to other business entities?
Is it best to create a ltd company formation or use other entities? The four main UK business structures are: a sole proprietorship/sole trader, a limited liability partnership, and a limited company (public limited company and private limited company).
Compared to the process of starting a ltd company, sole proprietorship does not require formation. It is the simplest business structure, with lowest set up and maintenance cost. However, unlike limited liability companies, a sole trader has full control and a full liability. This means, if the business fails, the owner is liable for all the debt and risks personal assets in the process. It can also be hard to extend credit facilities or to get financing.
Limited Liability Partnerships are hybrids of sole traders and limited liability companies. It involves two or more people who set up and register a business together. The LLP is a useful way for many businesses to protect their personal assets through limited liability. The LLP partnership is a relatively simple structure and there is less administration involved than limited companies. Each member (partner) has a stake and voting power specified in a partnership agreement that also clarifies voting powers and profit distribution arrangements. This agreement is not required to be shown on Companies Formation and is not for public viewing.
Why Start a Ltd Company Formation?
Have a look at these Companies House statistics as of June 2012:
|Type of Registration||Number on Register||% of Total Effective Companies|
|Limited Liability Partnership||53, 242||1.842%|
|Total on Register as of 06/2012||2,889,162||100%|
Why is the private limited company so popular? Although the process to create a limited company (private limited companies or public limited companies)) requires more paperwork and can cost more than trading as a sole trader or partnership business, limited companies provide invaluable owner protection from debt and liabilities unlike the sole trader. With limited liability, personal assets can remain intact, even if the business fails through debt. Capital can be raised more easily; credit can be extended with minimum risk to the owners/shareholders.
Further, UK private limited companies can distribute profits to its shareholders by way of dividends, which is not subject to National Insurance contributions. Another attraction of limited company status, ownership can be transferred without paying immediate capital gains tax.
What are the Advantages of Starting a Limited Company?
A private company has many advantages over a public company.
- Private limited companies may start business operations immediately upon issue of the certificate of incorporation; whereas a public company must first obtain an additional trading certificate from the Registrar of Companies.
- Set up of a private company needs only one director; on the other hand, a public company must have at least two directors and a professional corporate secretary.
- A private company does not need to hold annual general meetings, although they may do so if they wish.
- The restrictions on lending or loans to its directors are less rigorous in a private company, except if the private company is the subsidiary of a public company.
- Private limited companies have fewer provisions regulating director’s dealings with the company.
- Private companies up to a certain income can file abbreviated accounts with register of companies
The private limited company has a few drawbacks as compared to a public company.
- A private company may not offer or sell shares of the company to the public.
- A private company cannot list shares or deal on the Stock Exchange.
How to Create a Ltd Company?
From the homepage of our web site select the most appropriate package to create a limited company or buy a shelf company.
To set up a your own individual Limited company please see Setting up a Limited Company. This is usually quicker and cheaper than buying one of our Shelf Companies.
What is a process of buying a Ltd company?
The alternative to starting a limited company is to buy a ltd company preformed — otherwise known as a shelf company. The Off-the-shelf ltd company is a company that has been previously incorporated by us, the formation agent. Shelf companies are formed with our own company secretary and directors. When you buy a ltd company (shelf), we will transfer shares from the existing Nominee shareholder, both provided by the formation agent, to the new owner.
For Information on Shelf Companies please see Shelf Companies.
Start a new Limited of Buy from the Shelf?
When you buy a limited shelf company from an individual, you do not know anything about its trading history. This can be risky. We ensure that you buy a limited company from us with a clean trading history. To buy a shelf company instead of going through the process of creating a new ltd company is affordable and convenient. The company has a name that is already registered, but can be changed after you buy it. Buying a shelf company may give an image of a longer trading history to enhance credibility of the company.
The advantage of starting a limited company on your own, you have the opportunity to set up the precise structure of business you need, with the name you choose, and the officers you want. By setting up a limited company on your own, you have control over these aspects of the company, and are certain of the company’s clean trading record.