Author Login | Popular Articles | RSS Feeds | Sitemap

Home | Uncategorized


Advantages of Limited Liability Company Formation

By:

Registration carries a number of substantial benefits to small and medium sized businesses effectively creating a new corporate body which is a distinct different business vehicle to the owners of the business. Shareholders who are protected from unlimited personal liabilities in the majority of circumstances and can carry significant tax advantages which vary from year to year.

Incorporation does carry additional legal responsibilities to that of being self employed. Company formation requires the submission of the incorporation details to Companies House which must be updated and confirmed each year through the Companies House Annual Return. Audited financial accounts must be filed annually both with Companies House and the Inland Revenue. And the provisions of the various Companies Acts must be adhered to by the directors responsible for the affairs of the Limited Company.

Every limited liability company must have formally appointed company officers at all times. A private limited company must have at least one director. The articles of association may require more than one, and each company must have at least one designated secretary. While a director can be the company secretary a sole director cannot.

Forming a Limited Liability Company

Starting a limited liability company in the UK requires the submission of forms, 10 and 12, plus a memorandum and articles of association to complete the company formation and registration. Companies House Form 10 provides details of the first directors and intended situation of the registered office. A name check should be carried out with Companies House to ensure the proposed name is available and suitable and the proposed limited company name entered on form 10 with limited as the last word. Also check addresses and post codes with Royal Mail to avoid the registration being rejected. Companies House form 10 must be signed by either by or on behalf of the subscribers to the memorandum of association.

Companies House Form 12 is a legal declaration that the formation details are true and can be signed by a solicitor engaged in the limited liability company formation or a person named as director or designated secretary on form 10 under section 10 of the Companies Act 1985. The Memorandum of Association sets out the objects and scope of the proposed company stating the name with details of the subscribers to the Memorandum of Association witnessed.

Table A is a standard format of a set of Articles of Association, a statutory document that governs the internal affairs of the limited liability company and it is recommended that Table a, Articles of Association is adopted in its entirety. Following a final check to ensure accuracy submit all 4 documents to Company House with the company registration fee and the company formation is complete.

Corporation Tax Advantages

Sole traders pay income tax on the net taxable profit which will be reduced from 22% to 20% from 1st April 2008 on net profits earned over the personal allowance. A limited liability company pays corporation tax which is a tax payable on the net profit. The taxation advantages and disadvantages change from year to year as government policy in relation to tax rates and allowances change.

From 1st April 2007 the rate of Corporation Tax for small businesses was increased from 19% to 20% and is set to increase further from 1st April 2008 to 21% and further to 22% from 1st April 2009. These tax changes narrow the gap between the tax payable on profits by sole traders and limited companies. The taxation balance for businesses earning in excess of 34,840 pounds before the owners / directors wages remains in favour of incorporation since the self employed profit is also subject to 8% national insurance in addition to the 20% tax which rises to 40%. The scale of the tax advantage by being incorporated is dependent upon the level and expected level of net profit.

Generally self employed businessman paying tax at the lower income rate of 20% would not gain a significant tax advantage the main difference being the national insurance of 8%, while anyone paying the personal tax rate of 40% would show significant tax advantages compared to the corporation tax rate of 20% in 2007 rising to 22% by 2009.

Advantages of Limited Liability

A sole trader receives no protection from the business liabilities should the business run into financial problems whereas the liability of the shareholders in a limited liability company is limited to the amount subscribed for that shareholding. Liability becomes less clear in reality. Banks and credit institutions often require directors of a small and newly formed limited liability company to provide personal guarantees against loans and credit.

In addition directors should be aware when starting a company that should financial difficulties present themselves and insolvent becomes a real prospect the directors themselves may be financially liable for any debts incurred if the company continues to trade after the directors became aware the company was insolvent. This is why administrators of companies that go into liquidation often immediately cease trading to avoid themselves as administrators being held liable for any subsequent debts being incurred.

Article Source: http://www.articlesnatch.com

About the Author:
Terry Cartwright, a Chartered Company Secretary, provides inexpensive company formation document packs at Company Formation and a company formation Incorporation service at Limited Liability Company assisting many individuals starting a limited company

Tags: , , ,
| Print | Ezine Ready | |

Please Rate this Article

Recent UnCategorized Articles

  • Ideas For Building Model Tank Displays By: Victor Epand - People have been enjoying the hobby of building model tanks for many years now. Model building is a way to show people how much attention to detail and what sort of artistic flair you might have. Model tanks could easily be relegated to spending their days gathering dust on some bookcase shelf somewhere but why should they when you can build a dynamic display for them? This will help to add life to your models and give them some character. A display involving scenery and built to scale is known as a diorama.
    Tags: model tank, diorama, display, scale
  • How To Assemble A Model Tank By: Victor Epand - No matter where you have gotten it from, be it a holiday gift or an impulse buy, a model tank can be extremely fun to assemble. If you have decided to try assembling models as a hobby just remember that you are choosing to join in on a pastime that is enjoyed world wide. Model building is an excellent stress reliever and can be a great way to pass the time as well. One thing that will help you on your way is by knowing how to correctly assemble your model.
    Tags: model tank, cement
  • How To Display Your Model Tanks By: Victor Epand - If you are looking for a way to pass your time and learn an interesting hobby as well then collecting model tanks may just be for you. Collecting models can take up a good deal of space if you end up with a large collection. It can, however, help to relieve a good deal of stress as well. Informative as well, collecting model tanks can go from being a part time interest to a lifelong hobby. One of the most important decisions you will make, however, will be on how to display your models.
    Tags: model tank, display, diorama, hobby
  • Limited Liability Corporation: Do One And Save Your Wealth! By: Ramapati Singhania - When the name of a company ends with L.L.C/LLC, it is a legal form of business which is incorporated as a company and offers restricted liability to its members. Limited liability means that a person investing in the business can face a loss which is upto a maximum of the net worth of the company at that point of time.
    Tags: limited liability corporation, limited liability company registration, llc incorporation
  • Four Great Reasons To Collect Model Tanks By: Victor Epand - With so many different reasons to collect model tanks it is really hard to narrow the field down. There are, however, four very good reasons that it does make such a great hobby and should be given thought. Collecting model tanks admittedly does not qualify you to be a surgeon but it can help you to learn skills that may come in handy if you were to become one. Listed below are the top reasons why you should consider collecting model tanks. Number one - It can take a good deal of dexterity to properly assemble a model tank.
    Tags: model tanks, build, skill, top, hobby
  • How To Weather Your Model Tank By: Victor Epand - If you have just assembled several model tanks and you have been looking for a way to work them into a great looking diorama then you might want to try weathering your tanks. This can make them look like they have been out in the field for awhile and have taken a pounding in battle. While it is not difficult to do it can take a little imagination and some forethought. When they are finished, however, they will look great rather than looking like they just rolled off of some assembly line.
    Tags: model tank, weather, paint wash
  • Model Tanks: Finding Your Skill Level By: Victor Epand - With so many different types of model tanks available today sometimes it can be difficult deciding which one is for you. One of the largest deciding factors should be the skill level that you feel comfortable with. You can choose as easy or as difficult a model as you wish. If you are new to building models then it may be best to begin with an easy level and work your way to the more advanced. One of the easiest levels to begin with is the one that includes snap together models.
    Tags: model tank, skill, snap, paint
  • Why Should You Detail Your Model Tanks? By: Victor Epand - Assembling model tanks can be both fun and informative. There can be a good deal more to it that just buying it and throwing it together. Most models come in one flat color. You might decide you would like to paint yours to look much more like the original that the model was designed from. Maybe the decals that came with your tank are not realistic or do not properly match the signs that would have been found on the original.
    Tags: model tank, detail, color
  • Why French Doors Are So Attractive By: Anna Stenning - Most people when beginning home improvement projects opt for extensions, a new conservatory, loft conversion, new bathroom or a newly fitted kitchen. Often these come along with a lot of stress, time, money and patience. The most popular choice for change comes from replacing their existing windows and doors. If their house is too dark or does not allow too much scope for natural light, then the next step for improvement is to allow for more light to enter into the rooms.
    Tags: french doors
  • Best Dating Tips For Men By: rodrigo rehn - It solely depends on your attitude and preferences what kind of a date you are looking forward to. Some people give a lot of importance to the looks of their partner and some pay more attention to the way she thinks. Before you start searching for a date or dating someone, you should be absolutely clear about your requirements. You are the one who decides if you are interested in a long term or a short term relationship. Then there are few things that you need to maintain if you really wish to keep your date happy.
    Tags: date, dating, attitude, personal

Today's Hot Articles

Comments

Search Ebay

Still can't find what you are looking for? Search for it!

Add to Google
ArticleSnatch Authors:
Member Login Sign Up Submit Articles Learn More Submission Guidelines Top Authors
For Publishers:
Most Popular Articles Ezine Notifications Article RSS Feeds Terms of Service
For Everyone:
Blog About Us Link to Us Contact Us New Stuff Link Directory Privacy Policy Sitemap Resources
Our Sites:
Free Magazines Book Your Hotel Stay Free MySpace Tools Massive Video Collection MJE Sales, LLC Blog MyWorldPlus Discounts Freedom Rocks MJE Sales, LLC
Stay and Watch a Video:
Click here to submit your free, permanent ads to TheFreeAdForum.com!

Submit Your link to the Open Link Directory Project

Copyright 2005-2008 MJE Sales, LLC. All Rights Reserved.
Proud member of the ArticleCkr Search Network Search Network!
ArticleSnatch.com is free for both publishers and authors to use and is supported entirely from advertising revenue.
Use of our service is protected by our Privacy Policy and Terms of Service.