Limited Company (LTD) – Advantages and Disadvantages in UK

In the United Kingdom, a limited company is a business structure that has its own legal identity independent from its owners. It is founded by filing with Companies House and offers its shareholders limited liability protection.

Here is the link to setup a limited company in UK

A limited company provides limited liability protection, potential tax benefits, a professional corporate image and credibility, access to finance funding for your company or business, and business continuity beyond the owners.

Limited liability protection means that the shareholders’ or directors’ personal assets are separate from the company’s debts & financial obligations. In the event of financial difficulties or legal issues in the company, shareholders or directors are generally only liable for the amount they have invested in the company.

Limited companies can benefit from tax advantages such as lower tax rates, the ability to claim business expenses, and opportunities for tax planning through methods like dividend payments and salary structures in your company.

Operating as a limited Ltd company can enhance professionalism and credibility in the eyes of customers, suppliers, and partners. It conveys a sense of stability, longevity, and commitment to the business, which can be beneficial for building relationships and attracting opportunities in the future.

Limited companies can access various funding options, including bank loans (business loans, asset loans), investment from shareholders or venture capitalists into the company, and the ability to issue shares. This can help facilitate the business growth and expansion of a company.

Disadvantages of a limited Ltd company include additional administrative responsibilities we have to manage on a monthly or yearly basis, higher setup and ongoing costs to setup a company, public disclosure of financial information, potential double taxation, and increased regulatory compliance for the company.

Limited companies have additional administrative obligations, such as filing annual financial statements to HMRC, maintaining proper company records every year, submitting tax returns to HMRC, and complying with legal and regulatory requirements set by Companies House and HMRC in UK.

Yes, compared to other business structures, setting up and maintaining a limited company incurs higher costs. These include company formation fees, accountant fees, ongoing compliance costs, and potential higher tax obligations.

Limited companies are required to disclose the company’s financial information, such as annual accounts and details of directors and shareholders, to the public through the Companies House website. When compared to other business arrangements, this reduces financial privacy of the company details and shareholders’ personal details like name and address.