The benefits of preparing the company

4 mins read

If you plan to start a new business yourself, you might want to consider whether you have to set the company or not. Or maybe you have run your business successfully as a single trader, and now think it’s time to make it more formal by putting it as a registered business.

The factor is taken into account

There are a number of factors to be taken into account when you set up the company. In most jurisdictions, registered companies are required by law to submit accounts every year. Often, unacceptable only submit your company account. Many jurisdictions will only receive accounts that have been audited by independent and certified auditors. If this is the case in your jurisdiction, then you have to pay auditor fees every year, and this tends to be a new cost, and sometimes quite large, for your business.

There will also be a fee related to the establishment of the company legally. In countries like Unites stated, you might have to make some registrations differently, depending on the scope of your business. You also need to compile formal documentation that details the nature of the business, rules and structure of the company, and gives a list of directors. You may also be asked to invest the early lump sum into the business, which may or may not be accessible after being invested.

Advantages to establishing a company

There are many advantages to establishing a company, the most important thing is that companies in law are separate entities from company owners. What this means is that legal actions taken against companies do not have an impact on company owners as individuals (assuming that the business has been carried out legally).

To show this importance, let’s use an example. A single trader who specializes in building and selling special cars was sued because one of the cars he sold had fallen, and the accident investigator had determined that the cause of the accident was the wrong construction. If a successful lawsuit, a single trader may be needed to pay compensation, and all its assets, including personal assets can be confiscated to fund compensation.

The same individual can make the company and do the same business. In this scenario, businesses are considered as builders and car sellers. After the accident, the lawsuit will oppose the company. Only assets owned by the company can be confiscated, and the owner’s personal assets will be intact.

Operating as a registered company also carries the added prestige level. When potential customers look for certain products or services, they will tend to believe that the registered company is more credible than a single trader. This can be a key factor in making or losing sales.


Working through registered companies can also provide significant tax benefits. Corporate taxes are often lower than taxes on income obtained. Companies can usually claim costs that are not available for the only traders. For example, all costs are running like the cost of purchase, service, fuel etc. for company vehicles can be abolished against income. In most jurisdictions, a single trader must provide its own vehicle and will be limited in what can be balanced with taxes.

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