Major benefits of trading as a limited company should be seen in the context of risk. Any business incurs risk, just as people do. In fact the risks faced by business may be considerably greater than those faced by the normal individual.
Financial risks are undoubtedly the greatest that face any firm. A business aims to make profits, and in order to do that it has to make capital investments in stock, equipment and human potential. All three of these things involve considerable financial risk.
The legal risks that are faced by the average business far exceed personal risks face by any individual. A business has liabilities in respect of staff who may be injured or become disaffected. Regulatory bodies such as competition tribunals or health and safety regulators may also cause many difficulties and possible legal action.
A business can also suffer from the personal risks faced by owners or directors. For example, if a key employee becomes ill a replacement may have to be found and then compensated when the original employee returns. Natural disasters like floods or storms can also affect a business without warning.
The main benefit of registering a business is that it limits the owners' responsibility for debts that the business may incur. So, for example, if the business becomes bankrupt debtors may not legally sell the owner's house and personal assets in order to pay creditors, leaving him destitute. This is also an advantage to a business which has its own identity.
In its dealings with customers and trading partners a registered limited business will enjoy a certain respect that come from its legal status as a trading entity in its own right. Depending on its location it could also benefit from tax breaks, inducements and awards made by business organizations.
Yet other benefits of trading as a limited company are that the name of the company and its future are protected by law. It will own its own name having been registered. If the person who started it up wishes to move on, or if he dies, the business may carry on as before, trading on it own reputation.
Financial risks are undoubtedly the greatest that face any firm. A business aims to make profits, and in order to do that it has to make capital investments in stock, equipment and human potential. All three of these things involve considerable financial risk.
The legal risks that are faced by the average business far exceed personal risks face by any individual. A business has liabilities in respect of staff who may be injured or become disaffected. Regulatory bodies such as competition tribunals or health and safety regulators may also cause many difficulties and possible legal action.
A business can also suffer from the personal risks faced by owners or directors. For example, if a key employee becomes ill a replacement may have to be found and then compensated when the original employee returns. Natural disasters like floods or storms can also affect a business without warning.
The main benefit of registering a business is that it limits the owners' responsibility for debts that the business may incur. So, for example, if the business becomes bankrupt debtors may not legally sell the owner's house and personal assets in order to pay creditors, leaving him destitute. This is also an advantage to a business which has its own identity.
In its dealings with customers and trading partners a registered limited business will enjoy a certain respect that come from its legal status as a trading entity in its own right. Depending on its location it could also benefit from tax breaks, inducements and awards made by business organizations.
Yet other benefits of trading as a limited company are that the name of the company and its future are protected by law. It will own its own name having been registered. If the person who started it up wishes to move on, or if he dies, the business may carry on as before, trading on it own reputation.
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Setting up as a limited company is just one of the ways company formation can occur. Learn more by visiting Companies House company formation website soon.
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