Thursday, May 6, 2010

Benefits and Considerations of Setting up a Ltd Company

With 32,091 companies operating in the country, the United Kingdom is definitely the industrial hub of the world, according to the February 2010 reports of the Companies House. Business organizations that are established as limited companies take on a legal identity, separate from their owners or shareholders to become a corporation. In this way, setting up a Ltd company proves advantageous to the entrepreneur.

There are three types of limited companies:
  • Private companies that are limited by shares. These offer limited liability to the entrepreneurs and shareholders.
  • Private companies that are limited by guarantee do not have share capital. It is guaranteed by the members of the company.
  • Public limited company, in which the payment on share amount is handled by the shareholders.
Benefits of Setting up a Ltd Company
For setting up a Ltd company one has to submit the required documents and data to the sole authority of company formation in the UK, the Companies House. In such an establishment, the entrepreneur’s liability is limited. In this way, the owner has to tackle less responsibility of debt situations than an entrepreneur of an unlimited company. The following are some of the main benefits enjoyed by a limited company:
  • Personal liability or other risks can be avoided to a great extent
  • Loans for business purposes can be availed easily
  • A Ltd company enjoys more credibility
  • Such a company cannot appoint Nominee Company officers or shareholders
  • Records of business formalities are not required to be maintained
  • The option of ‘pass through’ taxation
Considerations before Setting up a Ltd Company
There are certain considerations to be kept in mind while setting up a Ltd company. The most important of all is filling up the Memorandum of Association. This is the most crucial document and, therefore, an entrepreneur has to ensure the incorporation of the following points:
  • ‘Ltd’ has to be mentioned after the company’s name. The option of not applying the word can be granted with specific exemptions only.
  • The location of the company had to be mentioned.
  • Company objectives need to be mentioned, along with all the activities that the company might engage in.
  • Subscription of the initial members, along with their names, addresses and description must be mentioned.
Apart from this, one also has to make sure that the company name is different from existing or booked company names. Several such clauses and conditions can be easily completed with professional aid. For more information about the registration procedure, visit www.companyformations247.co.uk.

No comments: