Limited company set up

Limited company status has a certain gravitas that perhaps sole trader status does not. Depending on the industry in which your business operates and who it is competing with, having limited company status may help your business be considered more professional. This may help you to win business or indeed access future borrowing opportunities.

Business owners/founders will need to determine whether this limited company model is the most appropriate structure for them and whether it will give them sufficient control over their business, whether it will mitigate any risks involved, and allow the business to grow successfully.

Austin Lafferty’s team of solicitors is here to guide you through the process to make sure you are fully aware of all of the pros and cons of setting up as a limited company.

What is a limited company?

We can help you understand what it means to be a limited company and how your business entity will be legally separated from your own finances and assets.

We can also help you understand your legal obligations in terms of the financial reporting that is required for all limited companies.

If the business is owned by more than one shareholder, we can advise you about whether you may need any additional documents in place such as Articles of Association or a shareholder agreement.

What are the benefits of setting up as a limited company?

One of the major attractions of choosing a limited company structure is that any debts or losses are legally associated with the business and not with the individual or individuals who run it, which means the shareholder’s personal assets, such as their home, car etc are protected. If a company becomes insolvent, it is the business itself that is declared bankrupt, not the shareholders or directors.

Similarly, the shareholders cannot be sued personally if the business makes an unintentional mistake. Therefore limited liability status is crucial for any business that provides high-value products or services. Limited company status is unlikely to protect the shareholders from any wilful wrongdoings, however.

While these benefits may be appealing, limited company status can also mean additional work.

The owners/directors of a limited company must file annual accounts at Companies House. Many limited companies choose to employ the services of an accountant to ensure their finances are managed efficiently, but this is an additional expense.

You’ll need to submit tax returns both for the business and usually for the shareholders too, as well as update Companies House about any other changes to the business or its ownership.

While it is indeed reasonably quick and easy to register a business with Companies House, it may be beneficial to seek advice from a solicitor or lawyer before doing so, to ensure this structure will meet the businesses’ requirements, both now and in the future.

We are here to help

Our business team will help address your specific needs. Whether you are looking to set up a new venture or switch from being a sole trader to a limited company, our expert solicitors will ensure you have all the correct information at your fingertips and help you make the best decision for your business.