It is quite a common occurrence in the UK for Limited Companies to adopt a “trading” name to run their business with. In some instances, a limited company may well run multiple businesses, with various different “trading” names, yet all under the umbrella of the same company.
What does trading through a limited company mean?
Trading through a limited company involves potential tax costs. As the director of a limited company, you would no longer be able to draw money out of your business bank account freely. The company could pay you a salary and/or pay dividends on the shares you own.
What are the disadvantages of trading as a Ltd company?
Because the company is considered to be a separate legal entity, any losses made by the company can only be set off against any profits made by the company in prior years or any profits which the company may make in future years. This may be a great disadvantage – especially in the early years of the business when the likelihood of losses is high.
How many limited companies are in the UK?
Setting up a business as a limited company is the second most popular way of setting up a business in the UK. In 2020 there were around 2 million trading limited companies.
Which is better limited company or sole trader?
It’s well known that a limited company is more likely to be tax efficient compared to a sole trader, and that is one of the many reasons it’s a popular business model. A limited company director will usually take the maximum amount that is not being taxed in the tax year.
Why do magazines trade as a Ltd company?
For example, many magazines will trade as a ltd company because they may be at risk of being sued over inflammatory or derogatory remarks – this is why ‘Private Eye’ magazine is published by a ltd company!! The shareholders’ liability is limited to the amount of issued share capital they hold.
