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What is a Limited Company?

Choosing the Legal Status When starting a business, it's crucial to choose between being a sole trader, partnership, or limited company. The decision revolves around personal financial liability - as a sole trader or partner, you're personally liable for all business debts; however, setting up a limited company offers protection against this by creating separate finances from personal ones.

Implications of Limited Company A limited company provides financial security and tax advantages such as tax-free profits up to a certain value and no National Insurance on dividend payments. It also enhances credibility with suppliers and customers but comes with complex rules for accounts and bookkeeping. Directors have legal obligations under the Companies Act while shareholders face restrictions on withdrawing money from the business.