Protect Your Assets

Through a Limited Liability Company

There are advantages

Possibly the biggest advantage in owning a business through a limited liability company if the protection it affords you from creditors. If something goes wrong in your business then all your other assets owned outside that business are safe.

There are also distinct tax advantages, particularly if you own rental properties because you can deduct the mortgage interest as an expense.

Capital Gains Tax, Inheritance Tax and Capital Allowances all add to the advantage of using a company.

It is always advisable to seek the advice of a tax expert before taking this option.

There are disadvantages

The main disadvantage of operating your business through a company is the ongoing expense and time requirements necessary which are not present as a sole trader or landlord.

Not only do you have to contend with HMRC but also Companies House. Each of them want returns and reports. Companies House requires a report every year plus a set of Annual Accounts. They may or may not be the same set you submit to HMRC with your tax return.

Many shady operators have been caught thinking that trading through a company protects them from everything. It doesn’t.

If you trade “recklessly” and your company is wound up, your creditors may come after you personally to settle their claims.

As an honest person trading through a company should provide all the protection you could need.

Alternative structures

There are a number of alternatives to a Limited Liability company. Each has both advantages and disadvantages that depend entirely on what your objectives are.

Public Company – which does not need to be listed on one of the trading platforms like the London Stock Exchange.

Partnership – possibly the most dangerous structure of them all.

Limited Liability Partnership – better than a partnership because your liability is limited.

SPV’s – this is just an ordinary company but with severely restricted scope to adapt to changing circumstances. For instance, if the Articles of Association say that the company may only invest in residential property then it cannot buy industrial or commercial property. Hence SPV (Special Purpose Vehicle)

If you have decided to use a company for your business then we can certainly help you.

To find out more just click on the link.