The main benefit to the investors of investing in the limited liability company is limited liability restriction that means that liability of an investor is confined only to the amount invested as a capital in the company.The business of an investor and investor both are considered as separate entity from each other. Hence,investor’s personal assets, which are not associated with limited company are totally separate from the company and so if Banks and other payable could not recover their loan from company’s asset upon company’s liquidation then they do not have any access to investors personal assets and property. So any one who wants to keep their personal assets safe, for them it is probably the safest form of investment.
But obviously, the limited liability is not the only thing which needs to be considered before investment, there is difference in the profit distribution and governance structure as well as compared to sole proprietor business.
Profit Distribution:
Investors (or more precisely shareholders) invest by share issue and once capital invested, investors take their share of profit in the form of dividends issued by the company. These dividends depend on the company’s Net Profit after interest and tax.
Governance:
The company is run by the directors those who being entrusted with the running of business and shareholder stake part in the decision making by annual general meeting or AGM in which the votes of investors decide the strategy of company. The company is run under corporate governance rules and these decide how a company’s governance structure must be designed. There are specific committees which play an important role in the management and decision making like audit committee. Directors take the decision at corporate level and directors include both executive and non-executive directors who play their role in executive decision making.
Companies documents:
There are two important documents required by Companies House to submit by new subscribers so that a new company can be registered.
Memorandum of association:
In memorandum the subscribers agree to become a member of newly formed company by undertaking to have at least one share. Memorandum must be authenticated by subscribers and it must be in a prescribed form.
There must also be a statement of compliance and application for registration.
Articles of association:
Articles of association stateswomen the company is governed, control and owned. The articles put different restrictions on the company however the Companies act 2006 gives companies unlimited powers.
WeAccountax will advise you about consequences of investing or registering for limited liability companies together with all the issues relating to its tax, finance and statutory implications.
- It is not necessary for investors to take part in management any one, all or no one can be the part of management.
- Can bring finance in the form of capital invested in return for shares issued as well as in the debentures and loan notes issued.
- Business gains a reputation of registered businesses entity and an entity following Corporate Social Responsibility.
- Easy to obtain loan finance from banks because even if a company goes to liquidation the creditors are always given priority in repaying debts after debentures repayment.
- Different investors and directors can bring expertise to the companies so business can take advantage from skills of these people.
- Company can be converted from private limited company to public limited company and hence can bring a large finance to increase its business operations.
- A company can buy an interest in any other company to form a group of companies. This can be in the company of same sector or in another sector.
Capital investment in companies:
Capital is invested in different ways in private and public limited companies, private limited companies are not allowed to offer shares in open market, so that is why the private limited companies are mostly family owned businesses or some closed friends found an organization in form of a private limited company, while in public limited companies the shares can be offered openly in stock exchange but of course to avail the benefits the companies have to fulfill specific listing requirements.
Reporting in Financial statements of limited company:
There is a confidence in the financial statements of a company by the stakeholders as financial statements are always prepared according to IFRS and IAS, together with the specific audit requirements by the authorities.
Companies financial statements are always prepared in accordance with International Financial Reporting Standards and International Accounting Standards. These define the way financial statements are prepared for the companies and so can be understood by all the stakeholders around the world. These standards define the way different assets, liabilities and capital investments are recognized and accounted for, this provides a standard format to the financial statements of a company.
Together with the financial statements preparation there are also the statutory audit requirements by the authorities for companies, which gives a confidence to the stakeholders of the company, that the financial statements present fairly the financial position of the company.
WeAccountax offers company formation services for the process of registering your business as a limited liability company. Our competent team will also guide you about the tax and finance implications to the registering.
Services to incorporated Companies:
If you are already registered as a company our team will provide you support you require to run business as a limited liability company.
WeAccountax offer the services related to the management and operations of a company
- Including services related to the Financial accounting and book keeping of the company, together with guidance of how to maintain documented records.
- Services relating to book keeping including the issues related to both manual book keeping and through software
- Services related to the VAT registration and planning including filing of VAT return, together with the management of corporation tax return(CT600) and its payment.
- Services related to Capital Gains Tax,its assessment, calculation and payment management.
- Liaison with HMRC and relevant authorities.
- Matters relating to payroll and its management.
- Representations in event of HMRC investigation and submission of statements to the Companies House.
- Matters relating to the impact of issuance of loan notes and debentures on financial statements and financial position.
- Matters of directors remuneration and the others employees payroll.
- Different valuations including valuation of non-current assets, their depreciation and impact of investment in them.
- Cost accounting services related to the costing of the product using different methods.
- Matters relating to claim of different expenses like Motor expenses, staff costs, repairs and renewals, different admin costs, different publicity costs and, training and professional costs.
Industrial Sector related rules and regulations:
There are specific rules and regulations which companies have to abide by , these are the exemptions, reliefs and subsidies to specific products. There are also different sections of tax law for different products and sectors. WeAccountax will help you in taking advantage of these reliefs and subsidies.
Penalties and fines:
There are penalties and fines for late and incorrect submissions so WeAccountax will assist you in, timely submissions of different returns and documents and how to prevent these penalties and how to liaise with different authorities like Companies House and HMRC.
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