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Freelancer and sole trader company establishment benefits: running a business alone can be a rewarding and profitable venture, but even if it's just a one-man-band, it isn't necessary to be limited to one type of company. Most people probably think that when there is only one person, they should register a limited company as a sole trader. However, there are a few more benefits available to a private company registration than to a sole trader, and these should be taken into account when deciding on the format of a company.
Better credit scores: one of the biggest advantages gained by a private company limited by shares, is its ability to access better credit. This works for monetary value, and also for stock.
Banks are better prepared to offer credit to limited companies, because the limitation is clearly defined and outstanding debts can be more easily recovered if necessary. This makes cash flow and capital easier to access, which is all useful for keeping the day-to-day activities running smoothly, and for obtaining future assets.
Suppliers also tend to offer better credit arrangements to limited companies, again because outstanding debts are easier to recover. This means that on occasions where cash-flow becomes problematic, stock-flow can remain at a constant, thus ensuring that cash can be recouped more easily.
Personal liability is limited: sole traders have unlimited liability. This means that in the event of unpaid debts, banks and other creditors can call upon a sole trader's personal assets and even their family home in order to recoup their losses.
A limited company is limited in personal liability, so in the event of a disaster, even if there is only one director, their personal assets are safe. This includes any situations where fines or charges have been incurred, or where litigation matters have taken place.
Greater potential for raising money: money doesn't have to be raised just through banking finance and loans; a limited company has an advantage over a sole trader, because it can sell its own shares.
Better benefits for others: it's easier for a limited company to create an affiliated pension scheme, and even obtain good insurance deals for its workers. If a sole trader has employees, these things are less easily obtained.
Advantages of Coddan Formations Agency's limited company establishment for sole traders and freelancers: by using Coddan to register a limited company, it's possible to relinquish some of the red tape and frustrating delays that can take place during the process. Coddan's automated registration service can be completed within 3-6 hours in some cases, and this level of convenience is something which is much harder to achieve alone.