company registration in Coimbatore – A private limited is legally created with limited liability or legal protection for its shareholders but it restricts its ownership.
A private limited company is a company that is kept private for small businesses. The liability of the members of a private limited company is limited to the number of shares they hold, respectively. Shares of a private limited company cannot be traded in public.
Private Limited Company registration in Coimbatore is the simplest and most popular form of business registration in India. It can register with at least two people. Protecting limited liability to shareholders, the ability to raise equity funds, the status of a separate legal entity, it is the most recommended type of business for millions of small and medium-sized businesses that are family owned or operated.
The merits of a private limited company registration in Coimbatore
There are some great merits to setting up a limited company and here it is:
Taxable
It is well known that a private limited company registration in coimbatore is more likely to be tax efficient than a single trader, and that is one of the many reasons for that to be a popular business model. A limited company director will usually charge a maximum amount that is not taxable in a tax year. For example, for tax year 2020/21 this amount is 12 12,500. More on tax rates here. The remaining income is then take by dividend. Dividends are great because you don’t have to pay NIC (National Insurance Contribution) on splitting. Dividends are also tax on income tax less than self-employed income.
Companies also have to pay 19% corporation tax on profits, as opposed to the 20-45% income tax that sole traders have to pay on their profits.
Limited liability
A private limited company provides limited liability to the business owner. While the sole trader is responsible and accountable for all business, the limited company owner / director has limited liability. This is one of the biggest reasons why entrepreneurs choose this business structure. Having limited liability means that if a business is given, your personal property and finances will be protect in the eyes of the law. For example, if your business is in serious debt, you don’t have to use your personal assets to cover business debt, however you can choose.
Separate entity
In the eyes of the law, a limited company business is a separate entity for its owner. This is another big advantage of setting up a limited company instead of a single trader. The sole trader and its owner are seen as an entity. The limited company director has a defense, if the business should fail. As the company is a separate entity, it can contract and be responsible for all business actions. A limited company director has no affiliation with the company other than their functions.
Professional status
When the business is set up as a sole trader, the business is not officially register with the Companies House. This simplifies the process; however, as anyone can use your name for your business and you have no right to take action against it (unless you get that trademark). When you register your business with Companies House, you trademark your business name so that no other business can use it. This makes your business personal and can also help you to easily find it online.
Additionally, limited companies have a greater reputation when it comes to business image. Even limited companies can come out bigger than them, so they will look professional. It also means that the limited company attracts customers and investors more than other commercial constructions. It will be easier for limit company directors to get funds like loans from banks, as they are seen as a secure business.
Company pension
As the owner of a limited company, the director can invest the pre-tax amount in the company pension scheme. This means that the director can save money instead of investing it in a personal pension plan, which will be subject to both business and personal taxes, more about financial advice here.
Maximum tax-free income
The limited company will allow you to maximize tax-free income by keeping your spouse and children shareholders. This would mean that everyone could take a tax-free salary of 12,500 (as per tax year 2020/21). For example, if a spouse receives a salary up to the amount of tax-free income, they can collect all 25,000 tax-free. This is the great advantage of having a limited company, working your way around taxes and increasing your income.
Demerits of a private limited company registration in Coimbatore
With wealth comes some negativity. Here are the demerits of a private limited company registration in Coimbatore
Critical to set up
The only merchant it is very simple and easy because you just have to register with HMRC. When the establishment of a limited company means the companies will be register with the House. You also have to pay a fee to set up. You can also create a limited company by a composition company for a fee.
Critical accounts
The company’s limited accounts can be complex compare to other business formats. This will require the director to record information on a monthly basis. Some of the things that need to be consider are tax returns, business expenses and keeping business accounts up to date. As the accounts of limited number of accounts are quite complex, you need to hire help for that. If you fail or make mistakes when filing a tax return and keeping a record of business accounts, you will face penalties from HRMC. Here’s what you need to know about limited company accounts.
Accounting costs
You are strongly advise to hire an accountant for your private limited company to deal with your taxes. Some of the tasks an accountant can do for you include filing your company’s tax return, filing your corporation tax, and filing your VAT return (if applicable). This means you will need to pay an accountancy fee, which can be quite exorbitant. However, as a limited company, these costs are necessary to avoid paying fines. To set up a limited company, you will need to complete the following documents to submit to the company building: IN01 – your company details and memorandum and articles of association, more on setting up a private limited company.
Ownership
The private limited company is likely to have shareholders, and it tells how the shareholders ’business is run. In addition to running a sole trader, its general goals are also determine by its owner. However, if a limited company has multiple shareholders, their views and opinions need to be taken into account. The bigger the share, the less ownership you have. So, be prepare to share some
