Many seem to have strange ideas about companies . We will endeavor to set out some basic answers for you.
Can anyone set up a Company?
Yes provided they are 18 years old and have not been banned from running a Company due to misconduct
What is the legal status of a Company- you are creating a new separate legal entity when you set one up. It is totally distinct from the shareholders who own it.
What are shareholders- people or other businesses that invest a certain amount ion the company by buying shares in the company. They have certain rights by law as to how the company is run.If the Company becomes insolvent they will probably lose the money they paid for the shares and have no further liability to creditors.
Who are Directors – employees of the Company engaged by the Shareholders to run the company. By law the directors duty is to run the company for the benefit of the shareholders. they are paid a wage by the Company and are subject to PAYE.
What is the downside- there are lots of rules and regulations in law as to how a company must be run. A Director who owns the business has to pay income tax on their wages and corporation tax on company profits before a dividend is paid. Documents have to be filed at Companies House annually that are a public record.
The Advantages? –
- the shareholders are only responsible for the value of their shares if the business becomes insolvent. The format was created to encourage people to set up businesses without risking losing everything.
- personnel can be changed with relative ease as the business grows.
- It looks more professional
How do I set up a Company- apply to Companies House to set up a company or ask Barkley Startups to sort this out for you.