Starting up as a limited company comes with a lot of benefits, but it can also be quite overwhelming for the uninitiated. There are several elements you’ll need to understand as you endevour to protect your finances and ensure aspects like tax and banking are set up properly, and with variations in rules and regulations depending on the area you live in, things can get confusing quickly if you’re not switched on.
In this article, you’ll learn about four of the most important things you should know when it comes to running a limited company in 2025.
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Contents show
Choosing the Right Company Structure
One of the most fundamental things you’ll need to sort out early is choosing a company structure that suits your long-term goals. For most businesses, the best route to go is forming a private company limited by shares, as this allows your profits to be distributed among a series of shareholders, thereby providing optimal protection. There’s also the companies limited by guarantee model, which is best suited for companies that seek to reinvest their profits.
Contact a financial advisor before starting to learn more about which structure will be best for you.
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The Registration Process
The business registration process varies by where you live, but most places follow similar rules.
You’ll need to submit your company name and a registered address, as well as details of who’s running the company. You’ll also likely be required to provide a brief description of what sort of business you run and how it works.
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Understanding Financial Differences
One major difference when running as a limited company versus as a sole trader is how tax is managed. Businesses under these types of structures are taxed with more flexibility, and are able to accrue income via means off-limits to individuals, which is reflected in the tax paid.
You’ll also reap the benefits of limited liability. This means that your assets are largely protected if the business faces financial hardship, because it’s viewed as an entirely separate entity from your personal accounts.
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Managing Your Money Day-to-Day
When you’re managing a limited company, it’s extremely important to keep your personal and business finances separate, and you’ll do this through the use of a special limited company bank account.
These accounts offer specialized features for bookkeeping and tax preparation and allow shared access when business partners or accountants need to make changes. Most also come with a dedicated online platform, enabling you to utilize specialised tools for expenses and invoicing.
A properly organized business bank account saves you a lot of time and hassle in the long run, as you’ve got all you need in one place.
Wrapping Up
Starting a new limited company – or switching your existing business to encompass a new framework – is a big step forward, and one that brings you several advantages. There’s more to learn than what’s been covered above, but these four points provide you with the relevant information needed to get started. Good luck!
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