Majority of the businesses these days are not companies but they successfully functioning. Many entrepreneurs prepare to have a company because they will have an ownership of the property, contractual or taxation relationships and obtain investment funds. Most businesses function as partnership while others as sole traders. The main point to recognize a company is that it is a separate entity and has limited liability.
What Is Limited Liability?
Limited liability provides protection on the personal assets of the company owners and shareholders in case the business operation fails. This means that people in the company will be required to pay only the required amount or what was agreed in settling the debts if the business is put into liquidation. There are many companies who hold limited liabilities who have lasted for many years and were able to keep their operation going successfully. Many people believed that having this type of company is safer than being a sole trader. With online applications company formation with registered office is made easier and faster. Company formation agents are now available to assist you to register your Scottish company and get all the documentations done in just a few hours.
Sole Trader vs. Limited Company
- Sole trader – Anyone can open up a business and become a sole trader although for some types of work authorities may require you to have permission or a license. Cab drivers, restaurant owners, street traders and many others are required a license to operate. Your business premises and qualifications will be inspected before they would allow you to function making sure that you comply with the rules and regulation they set. Acquiring a licenses or permission may depend on the type of business you want to set up. When you choose a business name as a sole trader you can use your own name or another business name. However, you have to make sure that it is not too similar with any other existing businesses.
- Limited company – The main reason why many people would prefer to own a limited company because there is more protection on the personal assets than that of a sole trader. When trading with a limited company your personal finances will not be affected in case the business fails. When it comes to tax matters as a limited company you will be paying a corporation tax and must set up a pay system where employees are required to pay income tax and National contributions. A sole trader on the other hand, will have to pay for income tax based on the profits of the business.
The law would allow a qualified person or group of persons to form a company and operate legally locally or internationally. However, the ownership of the business, the documents needed, capital required, taxation and other important matters depends on the type of business structure they choose. A sole trader, limited company partnership, private limited company and other types of businesses may have different registration requirements. To ensure that you are following the documentation rules when setting up your business you may want to ask assistance from company formation agents. They can register your business quickly saving you more time and money.