Company Formation UK
Limited Company Formation
Limited company formations not only make great business sense, they allow for greater business efficiency and entrepreneurship. Many UK entrepreneurs favor limited company formations significantly over that of being a sole trader operating under a registered business name.
A limited company creates greater levels of personal and financial risk management as any directors or shareholders of a limited company cannot be held personally liable or responsible for the legitimate actions of the company. This is commonly referred to as the corporate veil. Put simply, the company can own assets and raise finance in its own company name, and be sued or commence legal proceedings against another person or company in its own company name. This type of legal structure is favored by most successful businesses operating in the UK today.
The formation of a limited company allows companies to operate as a distinct legal entity. Where a person operating as a sole trader can be held personally liable for the action of their company, operating under their name, the extent of any liability attached to a limited company is limited only to the shares on issue. A director or shareholder of a limited company cannot lose more than they have invested in a limited company, whereas if a sole trader becomes insolvent and is unable to pay its debts, or has legal proceedings commenced against them, then their personal asset may be at risk. The liability of a limited company is only to the extent of the shares that a person holds in that company, whether as a director of shareholder.
Forming a limited company requires several important steps. A company formation agent is most often used by people wishing to form a limited company, as they have the expertise and are up to date with the always changing laws and regulations with regards to limited company formation. Many company formation agents are also qualified to provide professional legal and tax advice with regards to the operations of a limited company structure. A company formation agent will be to assist in every aspect of limited company formation, from the initial registering your chose company name, to professionally preparing the memorandum and articles of association which are the legal documents required to create your limited company. Once your limited company has been formed, you will be issued with a certificate of incorporation together with your company seal. Your limited company is now able to commence business.