Here at Cedar House Accounting we think it is great that Britain is becoming a nation of independent business owners. It means people can really follow their dreams, whatever they may be. It also means that people have more control over their lifestyle and work-life balance.
However, that doesn’t mean running your own business is easy. It needs a lot of hard work and dedication. You will also face a lot of things that you need to sort out yourself, or make important decisions on your own.
One of the first decisions you’ll need to make as a business owner is if you should become a limited company. As with all business decisions, it’s about weighing up the pros and cons to decide which is the best option for you?
Our experienced small business accountants in Peterborough can help you with this decision. We will talk you through how to become a limited company, what to expect and how we can support you as a limited company.
However, in the meantime we have put together just some of the pros and cons of becoming a limited company that you may want to consider;
The Pros of Becoming a Limited Company
· Tax: As a limited company you pay corporation tax of 20% and that applies to all limited businesses, no matter how big the profits are. As a sole trader you could find yourself paying tax of 40% to 45% dependent on how much profit you are making.
· Limited Liability: If the company was to run into financial difficulties you will not be personally exposed. This is not the case when you are a sole trader.
· Looks Good: When you are a limited company it looks good to people considering purchasing from you or investing in your business. It creates a more corporate image for you business and in turn this boosts the value of your business.
The Cons of Becoming a Limited Company
· Extra Work: Setting up a limited company can be quite a daunting process if you don’t know a professional accountant that can help you. You’ll need to register the business with Companies House and include information about you, which is open to the public domain.
· Costs: It can be expensive to set up a limited company and to keep on top of accounts, tax, vat and more. These are things that can be costly and stressful if you don’t have an accountant that you can rely on.
If you don’t want to employ an accountant full time and you don’t have the skills or time needed to look after the accounts of your business then why not call us? We specialise in supporting freelancers and SMEs with their accounting needs.
We can give you all the support and advice you need, and we are affordable too!
