How Do you - See the Fors and Against a Company

The "Fors" of a company are:

  • Limited liability - This means that the liability the shareholders have to contribute to the business where things go wrong is limited to the unpaid amount on their shares.

  • A company need only have one share and need only be operated by one shareholder and one director.

  • Because a company has shares, it is much easier to withdraw from the company by selling your shares, or taking a further interest in the company by buying more shares. This flexibility is very important.

  • The directors and officers of the company are not personally responsible for the debts of the company, as the company is responsible for its own debts. The exception is if the officers have been negligent or fraudulent.

  • The company continues even if the shareholders leave and can only be extinguished or “put to death”, as it were, by formally liquidating it or by having it struck off the Register of Companies.

  • A company has a continuous existence, which means that, even on the death or insanity or withdrawal of any of the owners, the company still carries on.

  • Most lenders are happy to lend to a company rather to the other types of business structures, such as sole trader or partnerships.

  • There are certain tax advantages available by running your business through a company.

The "Againsts" of a company are:

  • You have to comply with requirements of regulations and company law.

  • Costs more to set up than other structures.

  • You will have less privacy because the documents of the company are available for public scrutiny at the Companies Office.

  • There is quite a bit of time involved with the myriads of forms that have to be completed, such as the Annual Returns at the end of each year.

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