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Business & management consultancy with £1 share

Business & management consultancy with £1 share

Postby south1 » Sat Oct 12, 2013 9:29 pm

Some private companies limited by shares are incorporated with only £1 share. Very often these companies are dissolved about two or three years only after having been incorporated. What could be the reason why these kinds of company are incorporated.

Moreover strangely many of these companies are Business & management consultancies.

There is the advantage of limited liability however because many of these companies are business & management consultancies they have little need to borrow because they do not need a lot of assets. Furthermore because they are incorporated they have to pay an accountant to file financial statements. I would like to know if there is not a hidden reason
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Re: Business & management consultancy with £1 share

Postby landlordnightmare » Sat Oct 12, 2013 10:06 pm

Quite a few reasons on top of the limited liability.

Some clients insist upon it.

Tax efficiencies/flexibility.

Accounting for expences.

Registering for VAT.

Insurances.

PAYE.

the few that come to me off the top of my head.

oh ps - my accountant throws in my personal tax return completion into the deal!
Note: I am not legally qualified, just been around a few blocks. The sorry cynic.
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Re: Business & management consultancy with £1 share

Postby landlordnightmare » Sat Oct 12, 2013 10:58 pm

oh pps - you will also find some companies that originally incorporated with £1 - £100 of capital that went on to sell themselves or float for many millions or even hundreds of millions! A corporate structure and accounting instills some discipline both to show to HMRC and any potential future buyer of the business or future lender / partner.
Note: I am not legally qualified, just been around a few blocks. The sorry cynic.
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Re: Business & management consultancy with £1 share

Postby south1 » Sat Oct 12, 2013 11:01 pm

So why there are still sole traders and not all simply incorporate their company. Specially that most of these Business & management consultancies have only one member the director himself who owns the only one £1 share.
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Re: Business & management consultancy with £1 share

Postby landlordnightmare » Sun Oct 13, 2013 12:03 am

south1 wrote:So why there are still sole traders and not all simply incorporate their company. Specially that most of these Business & management consultancies have only one member the director himself who owns the only one £1 share.


I tell that to all the sole traders I deal with all of the time.

Probably because they don't have, or cannot afford, professional advisors.
Note: I am not legally qualified, just been around a few blocks. The sorry cynic.
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Re: Business & management consultancy with £1 share

Postby landlordnightmare » Sun Oct 13, 2013 12:16 am

south1 wrote:So why there are still sole traders and not all simply incorporate their company. Specially that most of these Business & management consultancies have only one member the director himself who owns the only one £1 share.


The Share capital of £1 bears no resemblance to the value of the company.

You are being silly if you think that. That is just the initial 'capital at risk' to the share holder - check out some massive floatations againast the 'initial share capital'. If you want to set up a bank it is slightly different.

What do you understand by 'share capital'?
Note: I am not legally qualified, just been around a few blocks. The sorry cynic.
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Re: Business & management consultancy with £1 share

Postby atticus » Sun Oct 13, 2013 7:40 am

I have clients who are members of a very strict Protestant church, and whose beliefs are that it is wrong to limit liability. Their (very successful) family business is run as a partnership.
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Re: Business & management consultancy with £1 share

Postby landlordnightmare » Sun Oct 13, 2013 2:19 pm

I would imagine, then, they have not gone down the LLP route then (that many firms of solicitors have).

Also I guess they are not part of the CofE that has also availed itself of limited liability structures.

I do have to say - good on them mind you - to stick to this belief in such a litigIous world.
Note: I am not legally qualified, just been around a few blocks. The sorry cynic.
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Re: Business & management consultancy with £1 share

Postby south1 » Sun Oct 13, 2013 4:42 pm

Concerning a previous post which says

“Probably because they don't have, or cannot afford, professional advisors”

Some law firms are sole traders and as a consequence do not lack of advices.

There should be another reason that I would like to discover
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Re: Business & management consultancy with £1 share

Postby landlordnightmare » Sun Oct 13, 2013 5:02 pm

south1 wrote:.

There should be another reason that I would like to discover


Should there? Why?
Note: I am not legally qualified, just been around a few blocks. The sorry cynic.
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