If you want to start a small business with limited financial resources, setting up a limited company may be your best bet. The largest plus point towards a limited company is the fact that it will allow you to legally separate your personal property and the company property. In case of a financial liability, the financial resources of the Company will be affected, but your personal assets will be left untouched. Besides, if you have to take a loan for your limited company, the Director(s) may have to pose as guarantors, but your shareholders will be safe. This will lead to the formation of goodwill among shareholders, which may prove beneficial to your business in the long run. This is not possible if you are registered as a sole trader; you would be held responsible for the financial condition of your company then.
Forming a limited company is a relatively hassle free procedure. You have to register your company first. This needs to be done through a registration office located in your city. You will be asked the name of the company you are registering. Suggest a name and ask them to confirm whether it is available. If the name has already been registered by someone else, you will not be allowed to use that name. In that case, you will have to suggest another name. Once you have decided on a unique name, request the personnel to register your new company with that name.
Next, you have to carry out the incorporation process by filling out the necessary documents. Ask the relevant persons at the registration office to provide you with information regarding what forms have to be filled out. The information contained in the forms will be used in future by law enforcement officials in case of a legal dispute. So make sure these are filled properly. The forms usually contain information regarding the nature of your company (Limited, Limited Partnership, Sole Proprietorship, Non-profit, etc.), the rights of the shareholders, the powers that the Director(s) will have, the physical address of your company, the address of the Company Secretary, and so on. You will also have to submit a Memorandum of Association and the Articles of Association. Prepare these documents yourself, if you know the procedure. Otherwise, hire a formation agent or a good lawyer to create those for you. After filing all the documents, pay the necessary fees and you’re done.
Establishing a limited company is one of the best ways of starting a small business. If you are just starting out in to the world of business, this is probably the best way for you to begin.
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