The Advantages of Setting Up A Limited Company
The Advantages of Setting Up A Limited Company
Conor Gallagher
Setting Up a Business. The Advantages of Setting Up A Limited Company.
Sole Trader or Limited Company?
If you are thinking of setting up a business, it can be difficult to decide which option is best for you. We have outlined some of the key advantages of setting up as a Limited Company to help you decided if it is the best option for your business.
Advantages of Setting Up a Limited Company
- Setting up a limited liability company offers just that – limited liability. Shareholders in a limited liability company are only liable to lose the share capital they subscribe. For sole traders and in partnerships, the individual’s personal assets are at risk if there is a claim against the organisation.
- Limited Company names are protected. Incorporation of a limited company protects it from use by another limited company.
- Limited companies have flexible borrowing powers.
- A limited company continues despite the death, resignation or bankruptcy of management and members.
- The interests and obligations of management are defined in a limited company.
- Ireland’s Corporate Tax Rate of 12.5% is one of the lowest in the world.
- New shareholders and investors can be easily assimilated. Employees can acquire shares too.
- Appointment, retirement, or removal of directors is straightforward.
- Scope for greater company pension scheme to be secured through a limited company.
- A limited company has a greater ability to raise finance by the issue of shares.
- Ownership of a limited company can be spread over a greater number of people.
- There may be a greater degree of business credibility of trading through a limited company.
Taxation
- Sole traders pay income tax. Sole traders’ income is taxed as the proprietor’s income, regardless of how much profit is retained as working capital, and interest on loans to the business is taxed as income.
- Directors pay income tax, and the company pays corporation tax on company profits. With the current rates of tax, company profits earned and retained are assessed at corporation tax, which is lower than if you were to pay income tax on the equivalent profits earned by unincorporated businesses.
- Personal tax advantages can accrue for directors of a limited company.
Accountability
A Limited company is a legal form of business organisation. It is a separate legal entity and, therefore, is separate and distinct from those who run it. The company (and not the shareholders) is the appropriate person to be sued in the event that debts are incurred by the company which remain unpaid, despite demand.
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Contact Gallagher Keane in relation to accounting, tax, or corporate finance services you may need to set up your business.
