Company Accounts and Payroll Specialists in Colchester
Many people dream of owning a business, and starting your own company is a very exciting venture which not everybody has the opportunity to take. Even so, the idea of starting a company can be a little daunting. One of the very first decisions you will have to make is also one of the most important, and that involves deciding which legal structure is right for the formation of your company.
You can be a:
- Sole trader
- Limited company
- Limited liability partnership
We are here to help you to understand the difference between each type of company and choose the one which best suits your needs. Amongst the many factors you need to take into consideration is how much responsibility you are prepared to take for your company’s tax, administration, debt and reputation.
If you are in a situation where the start-up costs for your business are low and there is no need to borrow money, you could decide to become a sole trader. In this case, you should remember that this would give you sole responsibility for all commitments made on behalf of the company.
Being a sole trader puts you in a lonely position as the benefits of being your own boss are counterbalanced by the level of responsibility you have taken which includes debts, assets and business decisions. If the above doesn’t faze you, then being a sole trader could be the path for you.
If you have a longstanding friend who shares a passion for your industry, a partnership is ideal. Many construction and service companies are established by family members and friends. In this instance, all partners in a business are equally accountable for debts created and decisions made by the company. It’s wise to carefully consider your choice of business partner.
As the owner of a limited company, your level of personal risk is limited by how much you choose to invest in your company’s growth and the contracts you sign in order to acquire the finance you need. If you are unfortunate enough to see your business go into insolvency whilst still in debt, your creditors will be reimbursed using the funds accrued in the sale of assets. Your company’s activities should not affect your personal credit rating.
Limited Liability Partnerships
This kind of partnership gives you the flexibility associated with a partnership whilst also putting in place the same obligations applied to a limited company. Each member shares the same amount of managerial responsibility and you also have the ability to add new members. The level of liability resting on each individual is determined by the agreements they have made whilst applying for funding and their individual investment into the company.
Whichever structure of company formation you choose, P S Bookkeeping and Accountancy will help you to prepare a business plan, cash flow projections & trading forecasts. We will also complete any registration procedures with Companies House, Inland Revenue and Customs & Excise and register for VAT on your behalf. Your accountant will set up the company for you, help you to register for PAYE and continue your account function if required.
If you would like the opportunity to make an informed choice with the help of one of our accountants, speak to a member of the team today. The planning stages of a business start-up are the most critical; this is where you may find professional advice to be very beneficial and a weight off your mind.