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Limited Company.

The most common question asked by our clients is "should I be operating through a Limited Company?"

There are 4 main reasons to trade as a Limited Company.

1. Limited Liability
The principal benefit of trading as a limited company has always been the limited liability enjoyed by the company's officers and shareholders. As a sole trader or other non-limited business, personal assets are at risk in the event of failure of the business, but this is not the case for a limited company. As long as the business is operated legally and within the terms of the Companies Act, directors' or shareholders' personal assets are not at risk in the event of winding up or receivership.

2. Taxation
Company profits may be distributed as dividends to shareholders. Presently, National Insurance is not applicable to dividend payments, effectively reducing your tax liability still further. There are also other tax advatages when compared with Sole Traders and Partnerships

3. Image
Operating as a limited company often gives suppliers and customers a sense of confidence in a business. Quite often, larger organisations in particular will prefer not to deal with non-limited businesses. Its all about perception.

4. Your clients/customers insist that you operate as a Limited Company.
This is particulary common in peronal service companies where individuals work on term contracts e.g IT consultants. The end user wishes to exonerate themselves from any comeback from HMRC if an individual has not paid the appropriate taxes.

Finally the costs associated with managing and operating a limited company are not significantly greater than with non-limited businesses. As a rule they are higher, but are easily offset by the associated tax savings.

KMA's initial incorporation costs for setting up a Limited Company are £250 + VAT This includes administration costs for dealing with Companies House and HMRC as appropriate, VAT registration, Payroll set up etc. Ongoing annual fees commence from £1,000 + VAT

All quoted fees are fully inclusive of all your businesses accounting and taxation requirements
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