WellTax can help you choosing the right solutions to best fulfil your business’ needs.
Whether in the case of switching from being a Sole Trader, or setting up an entirely new company, our advisors will help you through any process by communicating any changes to both HMRC and Companies House.
The legislation gives the opportunity to establish different types of businesses, which are:
- LTD (Private Limited Company);
- PLC (Public Limited Company);
- LLP (Limited Liability Partnership);
- Sole Trader.
The LTD is the most popular company category as it gives to the shareholder/s both flexibility and solidity. An LTD can be created with the owner being the sole shareholder, and it does not have constraints/limits on the shares contribution (it could be one share worth £1). Moreover, the statutory accounts are less complicated than the PLC because LTD companies have the right to file them only once a year.
Other advantages of this type of company, as in a PLC, are to:
- Appoint the directors and delegate business tasks,
- Distribute dividends.
Moreover, in common with an LLP:
- There are no restrictions on corporate capital.
- There is an opportunity to avoid the VAT obligations if the business does not exceed a turnover of £ 85,000 a year.
In regards of the PLC, this type of companies must have a minimum capital of £50,000, with at least 25% (£12,500) of initial capital investment at the time of the formation. An organisation does not have the right to start a business unless Companies House has received and confirmed the minimum capital contribution assigned has accepted it. Moreover, some strengths of a PLC are:
- Ease in capital increase since shares are public and can be listed on the stock exchange;
- More accessibility in obtaining loans from banks;
- Usually international and prestigious brand and corporate law due to the PLC size.
The LLP, instead, refers to a group of professionals (lawyers, doctors, etc.) and needs at least two members, both with limited liability. This company type has the same fiscal and accounting obligations of an LTD, but it is less flexible due to the most structured ownership as well as more formal decision-making process within the corporate structure. A general example of an LLP in which the profit is distributed equally among them. The strengths of an LLP are:
- Shareholders' agreements between professionals cannot be registered, therefore not accessible to the public
- This structure is used for companies operating in financial services, insurance and pension
- Shareholders can be part of the organisational structure (designated members). Thus, its costs can be lower than other limited companies.
If an individual starts working for him/herself, the person is automatically classed as a sole trader. Being a Sole Trader means that the person becomes Self-Employed even if he/she has not communicated this to HM Revenue and Customs (HMRC). As a sole trader, the person will be held responsible for his/her taxes and accountable for the business with all the assets that he/she owns. The Sole Trader is the person running the business as well as keeping the company’s profits after tax and employing staff. Also, pros of sole trading include that:
- Start-up costs are low;
- Have maximum privacy;
- Establishing and operating your business is simple;
- It is easy to change the company legal structure later if circumstances change;
- The company could be easily stroked off.
WellTax can also offer essential advice and support to the new business, on all elements of business management upon the registration. For further enquiries, please do not hesitate to contact us.