Companies exist to provide those setting up a business, venture or organisation with a legal framework in which to perform that function. Most commonly a company exists solely to run a business set up for the shareholders’ purpose of seeking profit.
A company ultimately is a legal recognition of a distinct legal personality separate from its owners. Essentially, it comprises a company registration number allotted (upon being set up or incorporated) at Companies House.
A company is a completely separate legal entity to its owners and managers and, as a legal entity, has a separate identity. To identify it, a company will ordinarily state its company registration number on any headed notepaper and will file certain documents at Companies House to ensure transparency of its structure, purpose, directors and certain aspects relating to ownership.
A company has, amongst others, the following advantages:
- it is responsible for the actions it takes, and therefore mitigates the risk faced by the owners being personally responsible. This is subject to directors acting in accordance with their legal duties.
- it provides an opportunity for investors to own a business, with often a view to profit, without being responsible for the management of such business.
- it may provide income to its owners (the shareholders) at a reduced rate of taxation.
- it enables the owners to trade in sensitive business areas where otherwise they could not run such a business in their own name, usually because of the publicity of the company’s financial information at Companies House .
- it enables the delegation of the management of the business to other, potentially more specialist, individuals (the directors).
- it enables a certain level of discretion in respect of ownership, personal assets and wider arrangements in respect of an individual or group of individuals’ assets.
- it enables capital investment to be more easily available, as the company must make some of its financial information publicly available.
- an individual (or group of individuals) do not have to set up their business as a company. The alternatives include simply trading using a business name, together setting up a partnership where they jointly share the risks and rewards or setting up a Limited Liability Partnership (which provides the benefits of a company in terms of the risk, whilst simultaneously enabling owners to run the company as there is less separation between the roles of shareholders and directors as exist within a company).
All of these have entities have different benefits which should be bespoke to the business proposal. Should you require more assistance with such matters then please contact us.
At Francis Wilks & Jones we have many years of assisting directors, shareholders and SMEs (as well as some PLCs) with regard to all corporate governance and commercial matters. The most common areas for you to be concerned with are likely to be the following:
- risks and benefits of a limited company;
- alternatives to a limited company;
- finance and security;
- quasi-partnership companies; and
- impact of Covid-19.
At Francis Wilks & Jones you will always speak to someone at a senior level who will respond to any query you have immediately. Our experts have been advising directors and shareholders on all aspects of business life since 2002. Let us help you too.