Need a Company?

The advantages of a limited company, sole trader and partnerships

The advantages of forming a company from the first day include:

1. limited liability; the owners' liability is limited.
2. corporate status; companies like dealing with companies.
3. longer term credibility; an established company trading for a number of years carries more confidence than one newly formed.
4. low tax rates.
5. ability to raise greater sums of capital finance to meet funding needs.
6. benefits of employment is extended to directors subject to certain rules.

The disadvantages include;

1. cost of incorporation
2. publication of Financial Statements in the Companies Office (small companies can publish a restricted or abridged version.)
3. compliance with corporate law.
4. Shareholders agreement is recommended but can be costly both to put in place. (The cost of not putting one in place can be high also!).

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The advantages of staying as a sole trader or partnership and not forming a company from the first day include:

1. low cost of setup.
2. simplicity.
3. low compliance costs
4. no publication of accounts
5. no compliance with Company Law required.
6. Partnership gives greater capital raising power than a sole trader (but not as good as a limited company).

The disadvantages include;

1. unlimited liability, the owners' liability is not limited.
2. partnership liability is joint and several on all partners - partners are responsible for the losses individually and collectively.
3. some companies may not deal with you.
4. longer term credibility takes longer to build; an established company trading for a number of years carries more confidence than one newly formed.
5. high income tax rates.
6. difficult to raise adequate finance.
7. benefits of employment are missing for owners.

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If you require more information please consult your tax advisor or email us at tax@fixmytax.com.