Why choose a limited company?

Each month, around 2,000 Scottish businesses choose to set up a limited company. Some are completely new ventures who decide that a company is the best option for them from the start. Others are established businesses in Scotland who consider the time is right to incorporate.

There's no right or wrong time, but there are certain advantages to running your business as a limited company to consider:

  • By setting up a limited company you create a separate legal entity. In effect, this means that your company can do all the things a person can do. It can enter into contracts, own property and other assets, borrow money in its own right and also borrow separate from the owners. So, the owners (shareholders) enjoy, and their personal assets are protected by, limited liability. This means that should the business be unsuccessful, the liability of the company's shareholders is limited to the amount of money they have invested in their shares in the company.
  • If you have an established business and have already built a reputation under a particular business name, registering a company at Companies House is the only way to protect your business name and to stop others from using it and benefitting from your good reputation. Bear in mind that registering a company with a particular name doesn't confer any rights to the equivalent domain name which must be registered separately.
  • You'll need to take expert financial advice but you may find that depending on your turnover, operating as a limited company is more tax efficient.
  • If you operate as a sole trader, you may find that there are certain contract opportunities that are closed to businesses who don't operate as a limited company.
  • Public perception may be unfair but businesses that operate as limited companies can often be viewed by potential clients or suppliers as more dependable commercial partners.

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"Even when forming a small limited company, keeping company records and adhering to the rules can be daunting. But from the first Oswalds have recommended, or indeed provided the solution"

 

Small Business Director, associated with Oswalds since 1989

   
     

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