Island Life Magazine Ltd October/November 2010 | Page 30

property Island Life - October/November 2010 LEGAL ISSUES STARTING A BUSINESS & FORMING A LIMITED COMPANY Part 2 Photo: Mark & Terence Willey Terence Willey & Company., Lawyers and Commissioners for Oaths (incorporating Malcolm Daniells & Company and The Bembridge Law Practice) Contact Terence Willey 01983 875859 or Mark Willey 01983 611888. www.terencewilley.co.uk major benefit is the limited liability that comes with this particular business model. The law will allow protection from liability for the owner or owners of the Company and if the C ompany accrues any debt during its running, the owners will only be liable up to the amount they initially have invested and no more and this can be an There are clear advantages in forming a Limited Company instead of running a business as a sole trader and often individuals are not aware of them. There are clear tax advantages to the extent that if you are a sole trader registered as self-employed you are expected to complete an Annual Self-Assessment Return. Tax will then be paid personally on the profits of the business and if the business is successful this can effectively mean that the rate of tax can become quite high. If a Limited Company is formed this would allow a business owner to pay themselves using a dividend process, which are subject to a lower tax threshold. This effectively means that the person running the business can make more money and give less to the taxman when running a Limited Company. This is not avoiding tax, but simply taking advantage of the Limited Company model. In forming a Limited Company another 30 attractive proposition in considering setting up a Limited Company. On the other hand sole traders and their businesses are seen to be one and the same by law so if there are business debts the business owner is automatically liable. Having said all this Company Directors in seeking loans from Banks and lending institutions are often required to complete personal guarantees which will extend the liability beyond the Company to the individual and this is why lending institutions will always insist nowadays on third party legal advice in completing such guarantees or sureties so that the full implications can be explained to the individual and entirely independently. For example if a Company is being run by a husband and he is offering security for lending which incorporates the family home, which may be in the names of himself and his wife, then and in such instance the wife must be entirely Visit our new website - www.visitislandlife.com