If you are thinking about starting a business, you have come to the right place. This article aims to provide you with information concerning this.
If you wish to set up a company that is a limited one or if you want to trade like a sole trader, you should consider the benefits of having a limited company. Continue reading on to find out more.
What Is A Sole Trader Or Partnership?
• A sole trader/partnership claims to be an individual(s) present in business who are themselves responsible for any debts along with liabilities of that particular business.
What Is A Limited Company?
• A limited company has a separate legal entity precisely from its individual shareholders.
• It should be known that the shareholders tend to only be personally responsible for any debts as well as liabilities of the particular company to the level of their own unpaid issued share capital.
• Therefore, you can see that in a sole trader/partnership type of initiative you will be fully responsible.
Benefits of a Limited Company
• The shareholders’ liability tends to be limited. This is how much share capital is subscribed as well as issued to the shareholders.
• When the time comes to pay off the company debts, the personal assets of the directors and shareholders will not get seized.
• A company tends to possess a separate legal existence when it comes to law. This case is not present for a sole trader or even partnership. The benefit of this separate legal existence is that when tough financial times arise assets of the company may be employed to set off the debts it has.
• The name of one’s limited liability company gets protected against duplication. This is not true for a sole trader, i.e. their registered Business Name is not protected from duplication.
• Limited companies do actually qualify for a helpful low corporation tax rate. This may aid the business is growing.
• Limited companies keep on trading without considering director or management alterations, till the company gets wound up and dissolved.
The above are some benefits of forming a limited company, but like everything else, there are also some disadvantages. Be sure to look at both sides of the coin before taking a certain path of action. One disadvantage includes the point that limited companies have limited liabilities.
It is tough figuring out how to start off a business in a new country. Their rules and regulations need to be known and you also need to know what types of businesses generally prosper in that country. There are many points that one needs to consider before starting a business. The above article is in favor of limited companies instead of a business that is characterized by a sole trader/partnership.