October 01 2012

The Advantages Of Trading Through a Limited Company

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Is your business trading in the most cost effective way and is your legal status adequately protected? Choosing the best legal ‘vehicle’ through which to operate your business is perhaps the most important decision you can make as a business owner – particularly with the advice of an expert companies lawyer. If you are thinking of setting up in business or are rethinking your existing business model, Parris Whittaker has years of experience advising companies and sole traders on business matters, guiding them through the advantages of limited companies.

Is your business trading in the most cost effective way and is your legal status adequately protected? Choosing the best legal ‘vehicle’ through which to operate your business is perhaps the most important decision you can make as a business owner – particularly with the advice of an expert companies lawyer.

If you are thinking of setting up in business or are rethinking your existing business model, Parris Whittaker has years of experience advising companies and sole traders on business matters, guiding them through the advantages of limited companies.

The Law

Company law in the Bahamas is governed by the Companies Act 1992, and the International Business Companies Act 2000 (for those formed for offshore purposes).

Making the choice between forming a limited company or running your business as a sole trader depends much on balancing the costs and administration require in setting up a company, and the protection that limited liability affords the directors. The majority of domestic companies in The Bahamas are limited by shares or by guarantee and are formed under the 1992 Act. The shareholders are essentially the owners of the company.

Memorandum and Articles of Association must be filed at the Companies Registry and there must be at least two members. There must also be a registered office in the Bahamas and – assuming it is going to be trading locally – will require an appropriate business license. The expert company lawyers at Parris Whittaker can give you sound advice relating to how to set up a limited company what is involved, and the likely cost.

The Advantages

Trading as a limited company protects the individual directors from personal liability for the debts and liabilities of the company in the event of, for instance, liquidation or insolvency. However, they are fully entitled to enjoy the profits earned by the company.( directors are salaried and may receive bonuses but not profits) The liability of the members or shareholders of this type of company is limited to the amount, if any, unpaid on the shares held by the shareholder. Conversely, the personal assets of a sole trader (or other non-limited business), can be at risk in the event the business has debts.

In the absence of both income tax and corporation tax in The Bahamas, there are minimal tax consequences for opting for a limited company. But a distinct advantage to incorporation is that many companies frequently prefer to do business with other limited companies rather than sole traders.

If you need advice on setting up in business or are thinking of incorporating your existing business, contact the experienced corporate lawyers at Parris Whittaker for expert advice