What are the disadvantages of forming a limited company?


Morning, all. I have a question relating to limited companies. Everyone keeps telling me to form a limited by shares company and keeps spelling out all of the advantages my business will enjoy with limited company status. It sounds great, but I am just curious about the flip-side of the coin. Are there any disadvantages of forming a limited by shares company?



There are a few downsides to running a limited company but they can usually be countered by the potential advantages, depending on your situation. The main disadvantages include:

  • Increased filing requirements for HMRC - Company Tax Return, annual accounts, and Self-Assessment tax returns.
  • Reporting and filing requirements for Companies House - annual return, annual accounts, notification of changes.
  • More record-keeping requirements.
  • Making company records available for public inspection upon request.
  • More complex accounting requirements.
  • Disclosure of company information, including details of directors and shareholders.
  • Requirement to display company details on stationery, websites and signage.

The complexity of company accounting requirements may require the expertise of an accountant if you are unable to carry out these tasks yourself, but the potential tax savings available to limited companies often cancels out the fees you need to pay to an accountant.

2 years ago

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