LEGAL ENTITY

This section will introduce you to Legal Entity, and will explain what Partnerships and Limited Companies are, and the benefits of each.

INFORMATION FROM MATT BRYANT AT OCL Accountants

Deciding on whether you trade as a Partnership or Limited Company will depend on a range of different factors, including:

• Tax considerations

• Legal requirements

Identifying the pros and cons so that you have a good grasp of the difference between a Partnership and Limited Company, is an essential part of the process of business planning.

Why making the right choice matters:

• Making the right choice can ensure optimum efficiency.

• It provides key protections and makes it simpler for your business to grow.

• It can be useful to discuss this with an accountant before you make the choice.

Partnership vs. Limited Company

What is a Limited Company?

Running costs

Cleaner / Advertise: £100 per booking = £2k/year

Maintenance: £50 per month

Services: £100 per month

Total: £3,800 / year

Release: £12,995.71

Conclusion

Finance of purchase

Savings: £ N

Business loan on property: £ N

Re-Mortgage on family home: £ N

I feel this business proposal is very low risk. Revenue figures on this place are currently relatively low due to poor marketing and presentation. We believe we can at the very least maintain this level and are confident we can increase it. The property is in [X location} which is a very popular area and has consistent rental opportunities. Peronsally we have residual money left every month to cover the loan repayment even with £0 rental income.

I feel as a husband and wife team, we are very well placed to make an excellent holiday let business. [Partner A]'s eye for details and knowledge of the market is second to none. They have an excellent contact list of tradepeople and have led many large projects.

[Partner B] is an expert in branding and online marketing and has run a successful web design business for 15 years.

• A limited company is a vehicle ideally designed for running a business.

• It’s one of the most popular choices because it can provide clarity and protection that other legal entities may not.

There are several benefits to opting for a limited company, including:

• Personal liability is minimised, as a limited company is a separate legal entity.

• Shareholders will only be liable for any unpaid amounts owed on shares.

• In most circumstances the company’s debts belong to the company.

• The individuals who run it won’t be responsible for paying the debts unless it can be proven that there has been a situation of negligence or fraudulent situations.