Right Structure of the Business

There is a very common phenomenon if you are starting a new business, set up a limited company. If you understand what you are doing, and you are happy to take the extra responsibility to do your books probably once in a week, month or after the regular interval, and you believe that this is the right structure for you, then you are more than welcome to proceed.

However, Zero One Consultants strictly believes that this is not always the right case. Choosing the right form of business is always a very tricky and sensitive matter. Limited and non-limited structures have their advantages and disadvantages. The difference lies in the type, level, nature of work and services you are going to provide. In common, we all believe that a limited company structure because of the nature of the limited liability is no match to any other business form. You also need to be aware of roles and responsibilities in the role of the executive officer (director of the company) also keep in mind those directors could be subject to prosecution in certain cases for lack of professionalism and misconduct of their role.

1. Already Up and Running

There are many ways of running a Small and Medium-Sized Enterprises (SME’s) business; you may be in the business structure of your choice which you may see feasible when you were setting up your business, you did not use a professional advice, you might have been misguided, wrong or ill-advised. Now you think you want to change your business structure this can be in any direction, e.g. you are currently self-employed, and you want to go towards a limited company, or vice versa. Similarly, you may be in partnership and want to leave and set up something on your own or vice versa. One thing you may not be sure how to achieve your strategic business move. Zero One Consultants may be your best choice to help you avoid a mistake you had committed in past and help and guided you through a smooth transformation and transition.

Have you already started your business and you are feeling stuck and helpless, you want to improve your business structure, or you are thinking to change the business structure? There is nothing to worry about just contact Zero One Consultants for your concerns, and we will listen to your requirements. If you are on a self-employed basis, running a day to day business just on your own and your turn over is crossing the certain limits, which worries you (we refer here crossing the VAT threshold limits). You need to speak to someone at Zero One Consultants in confidence, and we will be able to draw a smooth plan for your business. If you are a well-established self-employed business wanting to change to a company structure, going for a PAYE and VAT registrations and effective running of these tasks, Zero One Consultants will be able to help you and will claim incorporation relief, to set up your business with HM Revenue and Customs (HMRC). By applying for this relief, you will be able to take almost every single asset of your current business into your company business without paying any Capital Gain Tax, which could be a heavy bill for normal disposal of assets.

2. Self Employed Working for Your Self, Non-Limited Structure, (unlimited liability)

As discussed in detail in our working for yourself, a section of our website, all you will be required to start working for yourself is Unique Tax Reference Number. This is an official notification to HM Revenue and Customs (HMRC) about your intent to start working for yourself. Zero One Consultants can help you to apply for the Unique Tax Reference Number. If you are subject to or claiming tax credits and other income dependent state benefits, then you must make an appointment with Zero One Consultants to have an estimated income to provide all the relevant departments and have a complete discussion about your financial concerns.

a. Benefits, Advantages of being self-employed

1. Hassle free
2. Simple
3. Easy to maintain
4. No complicated tax issues
5. Your receipts minus your expenses net is your taxable income (subject to HM Revenue & Customs (HMRC) guidance)
6. Cost effective (Zero One Consultants prices starts from £100.00 per year (Terms & Conditions Apply, ask for a Quote Tailored to Your Requirements)
7. Ideal for professionals working from home
8. House wife’s selling and buying or providing services in your own time
9. Running a small business or market stall

b. Disadvantages of being self-employed

1. No separate legal entity, you are your business, and your business is you
2. Your liability is unlimited in some case you can lose your personal property
3. High rate of class 4 National Insurance Contribution which is income contingent
4. Compulsory payments of class 2 National Insurance Contribution
5. Only suitable for small business and trades
6. You are not going to be welcomed by a lot of established, big business unless you are an exceptional case

3. Company Structure, Employed Director/s (Limited Liability)

No doubt, the safest structure to run a bigger business or once you grow beyond a certain level. Self-employed are normally considered tax efficient up to an earning of £50,000.00 (Zero One Consultants’s Opinion) and will be suitable for professional services provider or a limited level of products, local tuck shop, small convenience stores, fish and chips shops, etc., etc.
One very important factor is to consider a number of your expenditures you are going to claim for your business. In Self-Employed (working for yourself) amount of claiming expenses back is limited to certain restrictions, e.g. you will be asked to approximate the amount of business usage of your vehicle for associated expenses, telephone, use of home office, stationery, etc. If you are in a company, you will be claiming all the expenditures incurred for your business purposes. A limited company can claim a wider range of expenditures and effective tax planning and leaves a lot of money for you at low rates of taxes. You can be paid by your company a nominal amount for salary as you will be considered as an employed, because of two separate legal entities structure, and leaving high profits to be taken as dividends and save a lot of money (take home wage) regarding National Insurance Contribution class 4. Limited Liability Company means your liability if you are a shareholder of the company is limited to the shares you have bought from the company. If the company goes bust over the years, then you will be losing your capital only, this will not affect your personal belongings or assets. Directors can be prosecuted though for misconduct or fraudulent activities.

Should you decide to go for a limited company structure, we can help you to set up your business structure? Our company set up fees are very competitive and starts from only £90.00 (Terms & Conditions Apply, Ask for a Quote Tailored to Your Requirements). Once your company is opened, Zero One Consultants according to your requirements will register you for Pay As You Earn (PAYE) and or Value Added Tax (VAT) and all other needs of your company. See our payroll and VAT section on our website. Zero One Consultants provide you with a free complimentary service of company credit check with Experian and monitoring all the time while you are in a contract. This enables you to save your company from frauds and financial abuse. We provide you with a mentoring service if you are new or first-time director or owner of a company (Terms & Conditions Apply, Ask for a Quote Tailored to Your Requirements). A more detailed service level agreement will be established with you.

a. Advantages

1. Limited Liability, owners are separate from the company and in some cases even owners, directors, and company all three separate legal entities.
2. More trustworthy as it has a separate legal entity. The company uses its bank accounts, manages its expenditures, enters into contracts in its name and seal and is fully responsible as a living person.
3. A company uses its name chosen and given to the company by its subscriber shareholders. This name is protected at the companies’ house by incorporating the company. The name is protected in certain ways, terms and conditions also applied as do not mix this with registering a name with Intellectual Property Office. Zero One Consultants can register your name with Intellectual Property Office as well.
4. Low administration work, as directors of the company, will be using professionals and qualified people; it will be less work involved for the company itself. At Zero One Consultants, our company clients have approximately 30 minutes every month to update their expediters and payroll figures. Zero One Consultants do rest to update their accounts.
5. Earnings of a company are company’s earnings; it has nothing to do with the shareholders and directors. When directors are paid either a wage or dividend, by the company they pay their tax, and in the case of wage/salary, it will be corporation tax deductible. National Insurance Contribution paid by the company will also be the corporation tax deductible.
6. If a company pays a pension for its staff, it will be corporation tax deductible.
7. Companies pay a lower tax rate for their profits as compared to individual, and they tend to accept more tax-deductible expenditures. Wider tax planning scopes are available to tax-efficient profits.
8. The company pays a lower rate of Capital Gain Tax, and further to this there are other reliefs available which can bring the Capital Gain Tax further down.
9. In some businesses and industries, having a limited company can provide a more professional image. If you are doing business with larger companies, you may find that they prefer to deal only with limited companies rather than sole traders or partnerships.
10. Finding funding (loans and financing) can be difficult for all types of businesses, but because a limited company is a distinct entity from its owners, it may be much easier for a company to secure business finance than it is for their sole trader counterparts.
11. If a shareholder wishes to retire, they sell their shareholding or shareholder dies; it is far easier to transfer ownership of a limited company than a non-registered business structure.
12. Similarly, if a director wants to retire, quit, or the shareholders want to remove the director out, it can be done without affecting the operation of the business.
13. A full disposal of the company is also a lot easier as compare to Self-Employed (working for yourself) business.

b. Disadvantages

1. If you have not hired someone, a professional accountant you will be at a great risk of costly errors, mistakes, and penalties.
2. The complicated business structure as a lot of compliance work is necessarily required, e.g. Filtered Accounts, CT600 and CS01 will be required on time either electronically or on paper.
3. As usage of professionals, depending on your business size and complexity, it could be a little expensive way to conduct business. Do remember, “Quality may come at a competitive price but may not come at a low price”.
4. Let US Help You

Starting price for a basic simple structure company with Zero One Consultants is £420.00 p.a. or £35.00 per month (Terms & Conditions Apply, Ask for a Quote Tailored to Your Requirements). Not all the business are necessarily of the same complexity and dynamics. We tailor our price according to your work. We deal with highly dynamic, complex, and versatile business trading with multiple VAT rates simultaneously. Employing different level of staffing, from daily wage rate to salaried people and directors with salaries, dividends and with Benefits in Kind. Our prices are based on what you require from us. It could be only VAT, PAYE, Year-End CT600, and CS01, Filtered Accounts and Directors’ Return or collectively all of them. For a full assessment and price quote for the work involved and if there is any external third-party expert work also required, please contact us.