If you are thinking of starting a business, you have come to the right place. This article aims to provide you with information about it.
If you want to set up a limited company or want to operate as a sole trader, you should consider the benefits of having a limited company. Read on to learn more.
What is a sole trader or company?
• A sole trader/partnership claims to be an individual(s) present in business who are themselves responsible for any debts along with the liabilities of that particular business.
What is a limited society?
• A limited partnership has a separate legal entity precisely from its individual shareholders.
• It should be noted that shareholders tend to be personally liable for the debts and obligations of the particular company up to the level of their own unpaid issued share capital.
• So you can see that in a sole trader/partnership type initiative you will be fully responsible.
Benefits of a Limited Company
• Shareholders’ liability tends to be limited. This is the amount of share capital that is subscribed and issued to shareholders.
• When the time comes to cancel the debts of the company, the personal assets of the directors and shareholders will not be seized.
• A company tends to have a separate legal existence as far as the law is concerned. This case is not present for a sole trader or even a partnership. The benefit of this separate legal existence is that when financial hard times hit, the company’s assets can be used to offset the debts it owes.
• One’s limited liability company name is protected from duplication. This is not true for a sole trader, ie his registered business name is not protected against duplication.
• Limited liability companies actually qualify for a helpful low corporate tax rate. This can help the business to grow.
• Limited companies continue trading without considering changes of director or administration, until the company is liquidated and dissolved.
The above are some of the benefits of forming a limited company, but like everything else, there are also some disadvantages. Be sure to look at both sides of the coin before taking a certain course of action. One drawback includes the point that corporations have limited liabilities.
It’s hard to figure out how to start a business in a new country. You need to know its rules and regulations and you also need to know what types of businesses generally thrive in that country. There are many points that one should consider before starting a business. The previous article is in favor of limited liability companies instead of a business that is characterized as a single trader/partnership.
