Limited Company
Becoming a limited company has very clear advantages for small business owners as it limits the liability of the owners as their personal finances become distinct from the business finances. Therefore, in general circumstances the company shareholders will not be responsible for the company’s debts, however in some cases a shareholder may need to become a guarantor for a large loan or credit agreement.
As a limited company, corporation tax will be applied to your taxable profits, small companies will however pay lower rates of corporation tax. This tax is rather complex so it is essential that you seek advice from your accountant, they will also be able to advise on ways in which you can minimise your corporation tax bill!
Like a Limited Liability Partnership you will need to register a Private Limited Company with Companies House (who has sole responsibility for company registration in Great Britain) before you start and produce a number of documents in order to complete the incorporation process. Many businesses will use formation agents or have their accountants complete this paperwork, however there is no legal obligation to do this. You will also need to adhere to ongoing requirements and for more information about these you can visit the Companies House website.
NB: Your company registration number should be displayed on all stationary and cheques