Is incorporation for me? Top five reasons to become a limited company

Expert advice from Oswalds, company formations and compliance specialists

Thinking of making the move from sole trader to limited company, but still not 100% sure?
It’s a big decision so it makes sense to do your homework.
Some businesses establish themselves as a limited company from the outset while others wait until their business has grown. Of course, they each have their own – and very valid – reasons.
Here are our top five…

Five key reasons to go limited

  • Name protection – incorporating a company is the only reliable way to protect your business name and prevent others trading on your good name.
  • Limited liability – trading through a limited liability vehicle, such as a company or limited liability partnership, does involve time and cost. But both provide the protection of limited liability.  So if the business fails, the creditors have no recourse to the personal assets of the directors (unless they can be proven to have acted negligently or unlawfully) or the shareholders.  It also serves to separate the business from its owner/s.
  • Kudos – clients and suppliers may perceive, rightly or wrongly, that the business is more stable, more reliable, even more reputable if it is in the form of a limited company.
  • Financial – depending on your turnover, you may find there are tax advantages to moving to limited company status. Your accountant will be able to advise you.
  • Commercial contracts – as a sole trader, you may find that if you are pitching for bigger ticket work, potential partners will only negotiate with limited companies; this tends to be the case in the public sector.
For more information, or for help with making the decision whether to go limited or not, contact Oswalds, which specialises in company formations and support and is based in Edinburgh.

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