Are you holding your business back by not registering as a Limited Company?

How the power of a limited company could help you position your business better, whatever your background.

The right company formation can help to set you up for success and can even save you money. But could registering your business as a Limited Company actually help break down barriers for founders from diverse backgrounds as well?

In this resource, we’ll look into the advantages of registering your startup as a limited company so that you feel empowered to take your business to the next level. We'll also explore how a trusted accountant like Crunch could make your life easier. Win win!

Does having a Limited Company give you an advantage?

Yes, it could. When you’re thinking about the legal structure for your startup, there are some advantages to registering a limited company which can help level the playing field and boost your chances of keeping up with your competition. Even if you’re up against entrepreneurs with more experience, more money and more followers, you can use the power of a limited company to position yourself in the same space. 

Registering a limited company can be particularly empowering for female founders, disabled entrepreneurs, and business owners from BAME communities. Our accountancy partners Crunch are committed to supporting Smarta on our mission to challenge preconceived ideas about who can be a successful founder. 

The advantages include:

• Credibility and professionalism
  Registering as a limited company demonstrates your commitment to your business and signals to prospective partners and investors that you are serious about your venture. It also shows that you have a structured approach to business. This could potentially help open doors to funding opportunities and bigger contracts. It can also help you cope with imposter syndrome!

• Limited Liability Protection
  When you form a limited company, you create a separate legal entity and your personal assets remain separate from your business finances. This "limited liability" means that if your business runs into financial difficulties in the future, your personal assets (such as your house or savings) are protected. This takes some of the risk out of business ownership and some of the pressure off you personally.

• Tax Efficiency and Savings
  There are financial benefits to having a more tax-efficient structure compared to registering as a sole trader or business partnership, such as paying yourself through a combination of salary and dividends. With a small business account in your corner you’ll be able to sail through the complexities of tax deductions, allowances, and benefits. Crunch can help you optimise your tax position and maximize your savings.

Discover free business resources on Smarta:
6 ways to take your first Self Assessment in your stride

Do you need an accountant if you have a Limited Company?

Actually, we’d recommend seeking the support of an accountant even if you choose to register your business in a different format or stay as a sole trader.

Running a startup can be daunting and partnering with an accountant who specialises in small businesses can be of huge benefit, especially for entrepreneurs with limited resources.

What to expect from an accountant:

• Expert Financial Guidance
  Even if you’re pretty experienced when it comes to bookkeeping, as a founder you’ll have a lot on your plate. An accountant can help you stay on top of your financial management, manage your cash flow and adapt your business plan accordingly. In the early days, mistakes can be costly, so an expert pair of eyes to help you make informed decisions is often worth it.
  
  
• Tax Compliance
  It’s the job of your accountant to be on top of every tax law and regulation, so they can help you minimise your tax liabilities and ensure that you stay compliant. You’ll be able to discuss with your accountant what can be put down as allowable expenses, as well as discover tax credits or incentives you could benefit from which may not be immediately obvious to you.

• Get some time back!
  You already know that your time is precious. Sign up to Crunch and start delegating some financial tasks! Whilst the cost of outsourcing tasks can feel hard to swallow at first, taking a longer-term view can help you see the efficiency: the more time you can free up now to pursue revenue-generating opportunities and build relationships with your customers, the faster you’ll be able to grow your business.

By registering as a limited company and embracing the support of an accountant, you are positioning yourself for success and breaking down the barriers that could potentially slow your progress. 

Are there any disadvantages?

If you decide to register as a limited company you’ll have some additional responsibilities when it comes to admin, which you wouldn’t have if you continued operating as a sole trader. You'll need to maintain company records, file annual accounts, maintain a registered office and submit an annual confirmation statement. However, these are all things that an accountant can support you with, so they needn’t become overwhelming.  
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