Diversity is the very thing that makes the world go round, right. No one person is the same and no destination is the same… that’s what makes the world such a unique place. In the US, the traditions, foods, government, and even fashion are quite different from that of the UK; that doesn’t mean that the US is wrong and the UK is right, or vice versa.
It just simply proves that there are differences in the world around us, especially when it comes to the way entrepreneurs conduct business.
In the business world, it doesn’t matter where you live… there is money to be made everywhere, especially for entrepreneurs. Now, just because money can be made wherever you are, that doesn’t mean that business will be conducted in the same manner everywhere… there are certain laws and stipulations that sometimes come with it, depending on where you’re trying to start your business.
If you indeed are considering starting a business in the UK or in the US, whether your existing company is doing well enough to expand on an international level, or if you’re simply looking to move abroad, it’s very important that you first understand the differences in the laws between the two countries. In fact, Forbes states that one of the key steps to expand your business globally is to check your legal readiness.
A Quick Refresher
What is an LTD? LTD stands for “limited company.” You typically see this abbreviation associated with businesses that are operated and based out of the UK. When you see it, just remember that it’s linked to a privately held limited company.
What is an LLC? LLC stands for “limited liability company.” LLC is an abbreviation that’s attached to businesses operating in the US. It’s a legal business structure that personal liability for business owners. With LLCs, business owners are also subject to tax benefits as well.
Pros and Cons of LLCs
One of the top reasons why business owners opt to form an LLC is because of the asset protection it provides. With LLCs, your business assets are completely separate from your personal assets. SO what that means is that, if your business is liable for any losses or debts, creditors cannot seek payment through your personal assets.
Now, the only way that a creditor would have access to your personal assets is by making the mistake of mixing up your personal and business affairs. If you are involved in a lawsuit, a creditor can only come after what you have invested in your company. As long as you don’t have your personal assets entangled in your business assets, you’re safe (for the most part, depending on the circumstances).
The “con” that’s associated with LLCs isn’t considered as a con for most entrepreneurs but the con with LLCs is its formalities. The fact that you have to keep everything is seen as an inconvenience, even though it protects your personal assets… Separate bank accounts, separate transactions and credit cards, and separate bookkeeping records… if keeping everything separate is wrong, would you want to be right?
Pros and Cons of an LTD
- Tax Rates: By opting for a LTD company, you’ll have a lower tax rate
- Investors: With small companies in general, it can be hard to find investors that believe your business is solid enough to invest in BUT with a LTD company, the investor is also protected by limited liability as well, so they have more security, which makes them feel better about their investment.
- Dividends: With an LTD company, national insurance isn’t a requirement of dividends, plus the tax rate is much lower.
- Address Requirements: With an LTD, your business must have a registered address in the same area that it was registered. In short, it’s where you receive mail.
- Penalties for Filing Too Late: With any business but especially an LTD, you want to make absolutely sure that you pay your taxes on time or else there could be some hefty financial penalties that follow.
- No Company Privacy: All company details are of public record. The office address, phone numbers, and names are available to the public.
Now that you know the pros and cons of both, you will now be able to make an informed decision on whether or not you want to file an LLC or an LTD but once you finally do make your decision, you’ll be able to smile with confidence in knowing you made the best decision for your business.
The only thing left for you to do is get the ball rolling! Good luck in your international endeavors!