Advantages of a Setting up a Limited Company: When you form a company you become its owner, it is an asset which you can dispose of as you wish.

As a Director, you work for the company taking a salary and profit after tax, but you are not responsible for any losses if things go wrong.

The protection a Limited Company affords you if you make losses is the reason most people decide to incorporate, and this is definitely the biggest advantage.

If your company fails, this protection can protect the owner from personal loss and, in some cases, even bankruptcy. However, if you have acted illegally or given personal guarantees you would not be afforded such protection.

Status: A Company is seen as having greater prestige than trading as a Sole Trader or Partnership, and will undoubtedly affect the behavior of some clients, suppliers etc.

Tax and National Insurance: Remuneration can be calculated to substantially reduce your National Insurance and Tax liabilities.

Expenses: Any expenses incurred which are wholly and exclusively for the business can be offset against the company’s liabilities.

Business Name: As a Limited Company your name is protected by LAW and this will prevent anyone else trading with it.

Disadvantages of a Limited Company

Personal Tax Returns: As a Director of a Limited Company you must complete a self-assessment Tax Return each year. (These would normally be completed by your accountant).

Accounts: Companies must have their accounts audited by a Chartered or Certified accountant. They must be lodged with Companies House so the public has access to them. However, small companies only file limited information, i.e., (modified accounts).