Please explain benefits of going Ltd and how do you do this?

Answer 1

Shareholders are limited to the liabilities of the pre-determined par value of each share. The corporation is a separate entity from each shareholder and responsible of its own actions not involving shareholders individually.

Answer 2

As opposed to Partnership ?

The main reason is to reduce Tax .. (see link)

You Register a Company at Companies House (you can buy pre-registered Companies for about £100 - you just have to up-date owner / address etc)

A Limited Company is a separate 'legal entity' (like another person) = it has it own 'existence' = it can own property, open Bank accounts, borrow money and go bankrupt etc. and, just like a 'normal' person, has to pay Taxes etc.

However unlike a 'normal' person a Company is a 'slave' to it's 'owners' i.e. the shareholders.

NB> Inland Revenue has cracked down on 'one man limited companies' (IR35 / IR591) in an effort to extract more taxes from contractors/consultants .. you can still do it but have to share the ownership (and hence profits paid as dividends) with more people .. (yes, they are also cracking down on man & wife limited companies (see ss660) )

Answer 3

well the company is viewed as legal persona and have perpetual existence even if its members die it continues to live for example companies like Barclays Bank has been in existence for a while.
the main advantage is that even if a limited liabilty goes bankrupt its shareholders personal property cannot be claimed to settle its obligations but , the shareholders can only loose up to the amount they contributed as capital in form of shares.
the company has the ability to source for capital from the public that is if it is a public company hence within a short period of time sufficient funds can be raised that is if the public view it as a potential business with low risk

Answer 4

It depends on size of your business. If U have a small business with few employees, the best thing is to run a properitiership firm. If you have partners who are working with you, naturally a partnership firm. If you aspire to expand your business at many places, go for company formation. But mind it only only if you want to issue shares to other people. With your and your partners money only, U should not go for company formation. Reason is simple, it's expensive and formalities of company formation too many. Consult your Chartered Accountant for more details and explanation. U may also seek more information on internet. Go for Google search. Ask 'Company formation, India'.

Answer 5

In principle the Limited Company is seperate from the individuals who run it. Therefore those individuals don't owe any monies personally (on their own behalf) to creditors.

In practice if suppliers don't really know you, or don't trust your ability to pay, they will make demands on you for certain amount of cash, and give you less credit limit, until they know if you are a reliable company or a fly-by-night artist.