A4G LLP
Kings Lodge, London Road,
West Kingsdown Nr. Brands Hatch,
Kent TN15 6AR

Phone: 01474 853 856 Fax: 01474 852 456
Email: steve@a4cc.co.uk

Trading as a Limited company

How else can we help your business?

 

 

To speak to one of our team of specialist accountants and advisers call us on (01474) 853 856 or view the relevant links on this page for further information.

"We have come up with viable solutions through our business structure to overcome these problems, while still allowing you to benefit from the many advantages of using a Limited Company."

 

Construction Consultant

What are the implications of trading through a Limited Company?

Some of the problems of trading through a Limited Company to consider:

 

Company Cars

Large increases in company car tax rates over recent years have left directors with a tough decision. Many have simply opted to no longer have a company car and instead claim mileage costs from the company. The 45p/25p per mile allowed by HM Revenue & Customs to be paid to you to cover the costs of the car can easily be insufficient, leaving you out of pocket.

 

Sharing profits

Companies are required to pay dividends to shareholders in the same ratio as the shares are held. This is a very inflexible arrangement, and unsuitable where you would like to decide on how your profits are shared on an annual basis. Additionally, you may wish to permanently change how the profits are shared, which would require either a sale of shares or new share issue.

 

Problems with selling

There can be some difficulties with selling a company to a potential buyer. One problem that arises is that buyers may not be willing to purchase the company due to the liabilities that are transferred to the new owners on completion of the sale. Corporation tax is a liability of the company and still needs to be paid by it regardless of who the owners of the company were at the time the tax liability arose. Of particular concern is that if a tax enquiry were opened and discovered additional tax due to be paid from prior periods it could fall on the new owners to meet this.

 

Higher taxes

Whilst many construction consultants can benefit from tax savings by trading through a Limited Company, at higher profit levels it can result in you paying more tax than you would have done had you of been trading as a sole trader or partnership. It is not possible to decide to change from trading as a Limited Company to a sole trader or partnership once you have established the amount of tax that will need to paid for a particular year.

 

Other shareholders

As shares can be bought and sold by the owners of those shares there can be situations where a shareholder of the business has no involvement with running it. Additionally, shares can be left as part of a shareholder's estate to their beneficiaries. As a shareholder they are entitled to dividends, as well as being entitled to vote on decisions made by the business. Limited Companies can be very inflexible in these situations and cause plenty of stress and cost to find suitable ways to resolve.

 

We have come up with viable solutions through our business structure to overcome these problems, while still allowing you to benefit from the many advantages of using a Limited Company.

 

Other considerations:


Shareholder agreements

It is vital for any Limited Company with more than one shareholder to have a legal shareholder agreement in place and to keep this up to date. This ensures all members are aware of and in agreement of their rights and responsibilities and can avoid lengthy, costly disputes in the future. Although you may believe it isn't necessary it is all too common to find a business in crisis if members fall into dispute, become critically ill or pass away.

 

We work closely with legal advisers who can prepare shareholder agreements to meet your requirements.

 

Insurance cover

It is common to find businesses in financial difficulty following the serious illness or death of a director. The director is likely to be a key person within the business, without whom the business will suffer a loss of income. However, you may have incurred costs such as staff wages that must be paid irrespective of the situation. Ensuring you have sufficient cover in place to compensate the business should allow it time to overcome the situation and continue on into the future.

 

Along with our independent financial advisor associates, we can help you identify any needs for insurance cover to ensure your business and your family are fully protected.

 

To speak to one of our team of specialist accountants and advisers call us on (01474) 853 856 or view the relevant links on this page for further information.