Company Formation – Not Just For Suits

When the subject of company formation comes up the image of suits and conventional offices might come to mind. After all, for so long businesses have been associated with formalities – and companies exist to drive revenue. And to a degree that is still the case. 

But forming a company doesn’t just benefit conventional businesses. Did you know if you’re a professional photographer or an artist you can actually operate as a company?

Here are reasons why as a freelancer, forming a company could be just what you need:

It’s tax efficient

If you form a limited company you can be a company director and a shareholder. This means:

• You will be able to take your income and pay it as dividends, if you make profit.
• So if you are a freelancer or a contractor and you turn yourself into a limited company you will be paying less tax.

So why would you not want to keep as much of your income as you possibly can – especially if you are being paid by job? For example if you are a photographer and you have just completed a big job for a client that you have worked on why would you not want to reap all the rewards of something you put your utmost into perfecting?

You have total control of your company’s affairs

As someone who is offering a service to clients and putting in the hours, shouldn’t it be the case that you have total control of your company’s finances? By forming as a company you have this level of control which you would not get if you used an umbrella company – which essentially acts as an employer for freelancers for fixed contract assignments.

These sentiments are echoed by FreelanceUK.com “Keeping complete financial and administrative control ensures your money is not risked with any third party administrator. There are of course more responsibilities in terms of paperwork and deadlines, but a good accountant will be able to minimise this burden.”

The element of prestige

There is a certain element of prestige and credibility attached to being a limited company. Let’s say someone is searching online for the type of service you might provide. A potential client will look upon you far more favourably if you are registered as a company. There is nothing wrong with using an umbrella company of course – but you may prefer to have your reputation more enhanced if, for example, you have ‘limited’ or ‘ltd’ at the end of your company name. It may also make clients look at you closer if you are registered with Companies House – which can also increase trust in your capabilities to deliver.

You don’t have to start trading immediately

The great thing about forming a company is that you do not have to start trading until you are ready. What will happen is that your name will be protected. This ensures that when you are prepared to begin trading you won’t have to worry about anyone taking your name as it will be legally protected.

Your personal assets are not at risk

Another advantage to forming a company, particularly one which has limited liability, is that you won’t be held liable if your creative venture doesn’t quite work out.

According to Easy Accountancy “As a sole trader or other non-limited businesses, your personal assets can be at risk if the business fails for any reason and leaves debts, but this is not the case for a limited company.”

So the risk factor is considerably lower if you decide to form your company as a limited entity.

We hope that you found this useful. So now you can realise that company formation can help people who not only want to make money but also follow their passion.

If you would like more information about how Company Formation MadeSimple can help you #ChangeYourLife and make your business grow, see here.