Top 7 Benefits to Know Of Company Registration in the UK
Self-employment and establishing a personal business are steps more and more people choose regarding their career path. Today, everyone is trying to find out what they’re passionate about and how to use that to gain profit, build a brand, or create something innovative.
Although many people choose to be their bosses, few business owners dare to advance their company to a higher level and register it. Most owners stick to the well-known sole trader routine because they’re afraid of what the next step might bring to their successful business.
However, taking the time to register the company has numerous advantages, some of which are life-changing. So, if you’re leading a successful business, make sure to check out these top 7 benefits of company registration because you’ll want to register your business upon completing this article.
Top 7 Benefits of Company Registration
Limited company registration is the best option for company registration for countless reasons. Nevertheless, here are some of the essential advantages you’ll find great benefit out of when registering your business as a limited company:
The most important reason you should consider registering your business as a limited company is the higher protection of personal assets.
As a sole trader, the business and personal assets aren’t divided in any way. So, if your business starts operating poorly and you end up in debt, all your assets are at risk. Even if you choose to shut down the company, your car, home, or any other possessions might be used to pay off any remaining debts.
You should consider registering your company to ensure the protection of all personal assets. It divides business and personal assets, so your possessions can’t be used under any circumstances.
2. Lower Taxes
Something that troubles us all is constant taxes that always have a way of taking our money. Although it may seem too good to be true initially, limited company owners have a lower personal tax rate than sole traders.
As a sole trader, your total income is subject to the National Insurance Contributions, while limited company owners divide their income into several dividends. That allows the owners to separate their salary from the rest of the income and pay a significantly lower tax amount. As of today, the tax rate for limited companies in the UK is set to 19%.
3. Reduced Costs
Most people start their business ventures as sole traders because it’s the most affordable option to get started with. However, you can upgrade your business to a limited company with little to no additional expenses.
Namely, the contemporary age of technology allows for a significant cost reduction because you can complete most of your obligations online. That includes hiring an online accountant and bookkeeper and using various apps to reduce costs in other ways. Ultimately, you’ll realize that you can save much more than initially planned when running a limited company.
4. Professional Image
It’s no secret that registering your company is a must to achieve great success with your brand. As a sole trader, your advancement opportunities are pretty limited because there’s only so much you can do with a small business.
However, if you decide to register your company, the entire business will receive a more professional image. With this, expect to quickly raise your brand’s awareness and visibility, closely connected to higher chances of professional opportunities and more customers.
5. Shareholding Agreement
As you witness your limited company’s growth, you might think about hiring extra staff to help you lead the brand more efficiently and productively. While sole trader business doesn’t give you such an option, limited company owners can issue different shares with specific tasks and responsibilities.
With special shareholding agreements, you can decide how much control and power the shareholders have, thus ensuring your company benefits from the set rules.
6. Pension Funding
As a limited company owner, you have the right to fund pensions for your employees and lead the funding as a business expense, so you don’t have to pay any taxes on these actions.
On the other hand, sole traders don’t have this opportunity, so they need to pay taxes on each business expense, even pension funding.
Therefore, if you’re planning to hire more personnel as your business grows, make sure to take advantage of this perk and register your company.
7. Transferring Ownership
All business owners need to have set plans for their assets if it comes to a potential accident. If an owner suddenly loses the possibility to work and lead the company, sole traders can’t do much about that.
However, limited company owners can quickly sell their shares or transfer them to another person. Thus the business will still operate and won’t cease to exist if the owner changes.
All in all, registering your limited company is something worth doing if you want to dedicate your career to building a solid company.
This step protects you and your business in ways sole trading can’t, so it’s highly recommended for all looking to take their company to the next step.