This is the most commonly used business vehicle. It has the great advantage of allowing entrepreneurs to separate their personal and business assets by limiting their liability to the sums they choose to invest in the company.
Private Companies are easy to incorporate but mistakes are frequently made both at incorporation and in the administration of companies subsequently. We would be pleased to help you with company incorporation and compliance.
Where there is a sole shareholder in a private company, its constitution is less important because that shareholder can always change the constitution if necessary. As soon, however, as there are to be two or more shareholders, advice should be sought both on the constitution of the private company and on the important protections that may be gained from a shareholders agreement. Many businesses encounter serious shareholder difficulties because there are genuine changes of circumstance that were not provided for at the outset in an agreement between the parties.
Private Companies are subject to corporation tax, which is very different to personal income tax. Salaries and bonuses paid to employees and directors are subject to PAYE taxation. The Company's profits (after deducting salaries etc.) are taxed. Shareholders of private companies who receive dividends out of net profits may also pay higher rate personal income tax on the dividends.