If you are to form a limited company in the UK, you have to update yourself with some important information. To begin with, the company should be registered with the Companies House that will set some rules and regulations. The applicant should go through the formalities and comply with all the dos and don'ts.
In order to form a limited company, the prospective businessman must state that it is a public limited company both in its memorandum and in its name. In this regard, the memorandum must contain a clause stating that it is a public limited company. It also says that the name of the company must end with 'Public Limited Company' or 'PLC'. In case it is a Welsh company, the Welsh version 'Cwmni Cyfyngedig Cyhoeddus' or 'CCC' is to be used.
If the businessman want to form a limited company that is also a community interest company (CIC) then the name of the company must end with 'community interest public limited company' or 'community interest plc'. The Welsh equivalents 'cwmni buddiant cymunedol cyhoeddus cyfyngedig' or 'cwmni buddiant cymunedol c.c.c' is to be used if the company is incorporated in Ireland.
After you form a limited company, you can decide whether its members' liability will be limited by shares or not. In this regard, the memorandum of association that is one of the documents by which the company is formed states that the amount of share capital the company will have and the division of the share capital into shares of a fixed amount.
Company law concerned with company formation says that the members must agree to take some, or all, of the shares when the company is registered. It is also said that the memorandum of association must show the names of the people who have agreed to take shares and the number of shares a person will take. This and some other formalities are to be maintained if you want to form a limited company in the UK.
If you form a limited company or convert your business to a limited one, you can reap in a bundle of benefits. First of all, in a limited company, the company's officers and shareholders have always a limited liability bestowed upon them. In a non-limited company or in conducting business as a sole trader, personal assets are at risk in the event of failure of the business. This is not the case with a limited company.
In a limited company, directors' or shareholders' personal assets are not at risk in the event of a winding up or receivership as long as the business is operated legally and within the terms of the Companies Act. To be able to keep the personal assets above risk is certainly a big benefit, particularly at a time when business failure has become one of the commonest things.
Saving on tax is the second important benefit one can avail if he forms a limited company in the UK. The first £10,000 of a limited company's profits is tax free which is not the case for sole traders and partnerships. So, the prospective businessman gets a good chance of saving reasonable amount on tax. Limited company helps you in reducing your tax liability still further. This is because of the fact that company profits may be distributed as dividends to shareholders and as of now, National Insurance is not applicable to dividend payments.
After you form a limited company, you become trustworthy in the eyes of suppliers and customers. As a matter of fact, larger organisations in particular prefer not to deal with non-limited businesses. They feel a sense of confidence while dealing with limited companies. Then costs associated with managing and operating a limited company are les than non-limited businesses. Finally, you have no obligation to initiate trading within any set time period after its incorporation. If you form a limited company, you can enjoy all these advantages.
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