Business name or limited company? - A comparison for the start-up entrepreneur

Introduction

When setting up a new business, one of the most important decisions to be made is the choice of business form. The most common choice is between a limited company and a partnership. Both have their advantages and challenges, and the right choice depends, among other things, on the scale of the business, the risks and the tax implications.

In this comparison, we look at the differences between a limited company and a limited liability company, and which is better suited to a start-up entrepreneur.

Business name - an affordable and easy start

• Establishment: fast and inexpensive (just a few tens on the YTJ service).
• Accounting: simpler than in a limited company.
• Taxation: the result is taxed as personal income and capital gains.
• Responsibility: the entrepreneur is personally liable for the debts of the business.
• Who is it for?For small-scale activities where the risks are low.

Limited company - protection and growth opportunities

• Establishment: Formal share capital is no longer mandatory, but set-up costs are slightly higher.
• Accounting: double-entry bookkeeping is compulsory, but financial monitoring is more transparent.
• Taxation: the company's income is taxed at 20 % corporate tax, and funds can be withdrawn as wages or dividends.
• Responsibility: shareholders are not personally liable for the company's debts.
• Who is it for? For the entrepreneur who wants to grow, access finance or limit personal risk.

Business name or limited company - which should you choose?

• Business name is often suitable for a start-up sole trader when the activity is small-scale and the risks are low.
• Limited company offers greater tax protection and flexibility, especially if the aim is to grow or employ others.

Summary

There is no right answer - the best form of business depends on your business.

Need help setting up a business and organising your accounts? At Konkretia Accounting, we can help you choose the right business form and get your finances in order from the start.