You have a business idea – great! What you should do next can be confusing, especially if you’re new to the business world. While you may have plans for what you want to do as a business, you may be unsure of whether opening a limited company and to register company name is the right thing for you. It is often said that it’s better to open a limited company and register company name – but what benefits can it mean for you and your business?
Let’s delve into the benefits of getting onto the limited company register…
Older is better-
whether you have decided to begin trading yet or not, it looks better to have an older company, as this is likely to instill more confidence in others who may be working with you in the future. Great if you perhaps want to open a company and remain dormant for a while. This is also why some people seek to purchase a ‘shelf company’. Your business will be in better standing if you have been through the company registration process, and it has been some time since it has opened, if possible. Some companies actually require those they work with to have been in business for a certain amount of time, so it may be worthwhile to register company name.
It’s all in the name-
One of the biggest reasons companies are formed are to reserve the name – to prevent anyone else from having a business in the same name – and for your brand to be truly protected. Unfortunately companies can’t be reserved, so to register company name would be the only way the name can belong to you. This would also come in handy when it comes to invoices – other companies don’t often pay up into an individual’s accounts if the service or product they have purchased was one they believed to have been via a company.
Bills, bills, bills-
You may think it’s easier to continue being self-employed or working for yourself (or perhaps you have a full time job and want to see where your business leads to), but it would be wise to consider registering your company name in the meantime – especially as this could mean paying less tax. Not only are you likely to be able to get access to bigger funds or loans, you have more protection when you register as a limited company, and can save further in regards to taxes when compared to being a sole trader. Even though you may not be sure of the future of your business, it couldn’t hurt to get as much protection you can for your business, and potentially save massively in the meantime.
Keeping it separate-
When you are a sole trader, your own income, savings, home and personal assets are taken into account when you have a business. When you register as a limited company, you would be regarded as a separate entity from the company. This means even if you are a shareholder of your company, the company’s finances are kept separate. When you register company name you can also be reassured that the company is limited liability – which means that you would not be liable for any losses to the business financially – if you are self-employed you won’t unfortunately have this luxury.
These are the most common reasons people decide to move from being a sole trader to a limited company; you should always seek further advice if you are unsure what the next step is for you and your business, but there are clear benefits to be had to register a limited company.
If you would like further information, you may wish you speak with a business advisor or get in contact with a specialist company formation agent.