Starting a new business is complicated, and can be a minefield of financial decisions. Do you start as a sole trader or a limited company? Do you need business insurance? Should you hire an accountant? Many financial decisions require careful thought for avoiding the risk of financial penalties and mistakes. Making a wrong decision not only will cost you money now, but will continue to haunt you for a long time. To help you make the best start here are 3 questions you must ask yourself before launching a new business.
Is It Best to Start as a Sole Trader?
If you do not expect a large income from the business, particularly at the start, it is a common belief that sole trader rather than limited company is the best route. But before you decide, consider how both entities affect your liability and your tax. If you are a sole trader in London then you have unlimited liability for all the debts of the business – there is no separation between you and the business. All your personal assets could be at risk if you are sued or you get into debt. If you do not want to risk this then you can register your company with Companies House, for a fee, as a limited liability company. When you do this the debts of the company belong to the company, and not to you. Tax issues are also affected if you are a limited liability company or a sole trader. If you are a new business then it is important to seek professional advice from an accountant as to what is best for you – if you are looking for accountants central London offers a range of professionals. The accountants central London provides can help you decide what your best direction is to take.
