What Are the Disadvantages of a Limited Company?
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Show Notes
People often discuss the advantages of a limited company but in this episode, Shaz discusses some of the disadvantages and the potential impact.
A limited company may be the right option for you but there are a number of disadvantages and it’s crucial that these are understood in order to ensure you choose the right strategy for you.
Shaz shares great content and advice about what you need to consider and why making this episode a ‘must’ listen for anyone wondering if they should or shouldn’t form a limited company.
KEY TAKEAWAYS
- Mortgage interest rates can be higher in a limited company than those taken in your own name.
- There is double taxation if the company makes a profit it pays corporation tax and if you take money out you will pay income tax (depending on your personal situation and the way it’s taken)
- If you have a limited company it will cost you more in compliance and accounts.
- Benefit in kind -if you have anything through which you personally benefit you have to pay tax on it and its expensive.
- If you are a limited company you have more exposure because there is information online.
- If privacy is important to you then a limited company may not be the right thing for you.
- If you as a limited company, you pay no tax in a year, then take money for yourself you will have to pay income tax on it.
- If you are a sole trader you can access the money and use it however you please.
- If you have a property in a limited company you don’t get an annual exemption.
- If you live in the property there is no principal residence relief.
- If you are looking to grow then section 24 means it would be better to do it as a limited company
BEST MOMENTS
‘It will cost you more in compliance costs’
‘The strategy is dependent on the deal, the exit plan and what you are trying to do’
‘The rates are becoming more competitive but are higher than a rate when in your name’
VALUABLE RESOURCES
ABOUT THE HOST
Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.
Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultation he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.
He is a huge advocate of having multiple streams of income. He has written a number of business books and regularly contributes articles to mainstream media outlets.
You can find Shaz on: