You can conduct your business without forming a company, for example, as a sole trader or as a partnership. However, two of the primary reasons for forming a company are the limited liability and perpetual existence that a company can provide to a founder.
Sole traders and partnerships receive all of the profits of their business but they are also personally liable for any debts and obligations of their business. A company, on the other hand, is a separate legal entity from its owners, which can, amongst other things, enter into contracts and own property. As a result, forming a company can protect personal assets from business liabilities.
The formation of a company for your UK startup can also add credibility to your business in the marketplace and help present a professional image. Companies also offer the ability to transfer all or a portion of the ownership interests in the company using straightforward and well-recognised methods.
It is important to note that certain formalities must be followed after the incorporation of a company, for example board meetings and annual reports. If you are not ready to comply with such formalities or they are in excess for the scale of your business, you may consider delaying incorporating a company.
If you are interested in incorporating a company in the UK, please contact us. We have a dedicated UK Corporate Solutions team, who specialise in these matters and will be able to assist and provide ongoing company secretarial support, if required.
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