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Find the right accountancy solution for your requirements

If you’re considering forming a limited company, you probably know the advantages of a limited liability setup (if you don’t, we’ve got an article for you here). But, what are the disadvantages of being a private limited company? We’ve put together a list of some of the most commonly mentioned issues:

It is more costly to start up
Setting up as a sole trader can be done at no cost, but you will have to pay a fee to form as a limited company.

There is a certain amount of paperwork involved
Although it’s not much more paperwork than working as a sole trader (around ten minutes per month), your accountancy fees as a limited liability company will increase slightly as you’ll need to file annual accounts. However, hiring a good accountant will help with administration. Choose an accountant who doesn’t charge by the minute or hour; instead look for someone who charges a fixed monthly fee with unlimited access. This means you can ask as many questions as you like without fear of being charged extra. This is particularly important when first starting, as you’re bound to have lots of questions about company formations and the like.

You have to file your accounts at Companies House each year
Your accountant will likely handle filing accounts on your behalf, but it’s worth pointing out that it will be on public record.

You have to file accounts with HMRC
As well as the Companies House filing, you’ll need to file company tax and corporation tax calculations with HMRC every year. Again, depending on your business structures, your accountant should be able to manage this for you.

Accountancy fees are generally more expensive
There’s no two ways about it: you’ll pay more in accountancy fees as a limited company than as a sole trader. On the other hand, going limited is one of the most tax efficient ways of working. So, with any luck, you’ll also be paying a lower percentage of tax.

If your income is less than £20,000 a year, it might be best to stay as a sole trader
Generally speaking, if you are below the £20,000 income threshold, you’ll probably be better off staying away from forming a limited liability company for now. However, this isn’t always the case, so it’s still worth contacting an accountant and asking them for their advice. Use our supplier directory to find an accountancy solution for your requirements.

If your still not convinced that going Limited may be for you and that it may just be too complicated, visit the following pages that will help give you some helpful information on some of the areas you may have been wary about:

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