How to Buy a Limited Company
Firstly it can be done directly with Companies House in Cardiff or
Edinburgh by calling them and they will send you the forms to fill
out. The advantage of this route is that it is relatively low cost,
costing around £20. The main disadvantage is the paperwork involved
and the danger that it might not be done properly if you aren’t
familiar with what's involved. Although the paperwork is not
difficult, it is time-consuming and requires a solicitor to witness
some documents, I will go into more detail about the paperwork later
on in the letter.
Secondly there are also companies which specialise in forming
companies, called registration agents which you can find in the Yellow
Pages, they will charge you anything between £50 and £150 so it’s a
bit more expensive. The main advantage of this route is that such a
company should ensure all necessary paperwork is handled and the
company is properly set up, saving you time and hassle.
Finally plenty of accountants or lawyers will handle the formation for
you. In many cases this will tend to be the most expensive route with
many professionals charging anything from £100 to £250 for forming a
company, although this should ensure your company is formed
correctly. Existing companies can be brought out by owning 51% of
their shares and thus having controlling command of their affairs.
Limited companies shares can be brought on the stock market.
There is a substantial amount of paperwork involved in setting up a
limited company. For starters you will have to draw up a memorandum
of association and articles of association which set out the
background deta...
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...ve to pay corporation tax which must be
recorded in the final accounts, sole traders do not pay this tax they
pay through income tax instead. The corporation tax is charged on a
limited companies profits at 25 per cent of the first £50,000 and 32
per cent of everything above that. Income tax is charged to sole
traders at varying rates, up to 46% on the profits earned by the
business in any year, regardless of money taken out of the business
for that year. The first £3,150 earned is tax-free, the next £10,000
is at a rate of 24 percent and everything above this is at 46 percent.
Another difference is that a limited company can have any year end it
chooses for its final accounts where as a sole trader must submit its
income before January 31st each year and is liable also to a 10
percent surcharge for late submission.