Forming a Limited Company

Put simply, there are many benefits of a limited company setup over being a sole trader.

Increased Tax-Efficiency

Typically, operating through your own limited company will see your take home pay increase. You get increased flexibility in terms of how you pay yourself through a combination of salary and dividends. Dividends are paid out of company profit after corporation tax and are taxed at lower rates than income tax rates. Significant tax savings can therefore be made.

Gorilla Accounting are experts in tax planning and we ensure that your remuneration is structured in the most tax-efficient manner which ultimately increases your take home. Use our calculator to get a quick guesstimate of your expected take home pay.

Claim On Expenses

As an incorporated business, you have the ability to claim a wide range of expenses which can be used for corporation tax, resulting in more take home pay for you. Operating as a limited company enables you to claim more expenses than if you operated as a non-limited company. For information on what expenses you can claim, visit our Guide to Expenses page.

Protection Of Your Personal Assets

Limited liability means your personal assets, such as your home, car and investments, should be protected in the event your company runs into financial difficulties or becomes insolvent.

As a shareholder, you aren’t personally liable for the debt of the company due to it being treated as a completely separate legal entity from directors and owners. This significantly reduces financial risk and gives greater peace of mind. There’s an increased level of risk for sole traders, however, as they are personally liable for any debts and losses incurred. This means that personal assets could be at risk from creditors if your business was to go bankrupt.

Better Credibility & Status

Once you incorporate, the perception of your business with clients and investors will be more favourable than if you operated as a sole trader. There are various reasons for this, including tighter regulation and monitoring of limited companies and increased transparency due to accounts and corporate details being available on public record.

Limited companies are held in higher regard and in many sectors business will only work with limited companies. The increased credibility that comes from incorporating will make it easier to attract new clients and also win new investment. Over time you can build a strong brand identity and compete on a level playing field with other limited competitors in your sector.