Limited Liability Company
Mark S. Elliott has spent 25 years working in various management roles within the tenanted and leased divisions of the UK's largest breweries and pub companies. His extensive knowledge and day-to-day involvement with pubs and publicans make him well qualified to know what is required to run a successful pub. He shares his knowledge and many 'insider tips' with you in this book. Mark is based in Cockermouth, Cumbria.
LIMITED LIABILITY COMPANY
A limited liability company exists in its own right and is owned by shareholders. Shareholders are not responsible for the company’s debts (except where personal guarantees have been issued by them), and their liability is limited to the amount of money they have invested in the business. Private limited companies have one or more shareholders, but shares cannot be offered to the public (eg on the stock exchange). Public limited companies must have at least two shareholdes and can offer shares to the public via the stock exchange. The number of licensees using this form of business structure has grown in recent years due to the tax benefits that some people have enjoyed. In order to ascertain whether there would be advantages for you and your business, you should seek professional advice from an accountant.
Pros
- Shareholder’s liability is limited.
- A limited company has credibility.
- There may be tax advantages.
Cons
- Its formation is complicated.
- There are setting-up costs.
- You must register the business with Companies House.
- You must submit annual accounts to them.
- Your financial information is publicly available.
- There are additional rules and regulations that you must follow.
- National Insurance contribution payments may be higher.
Running a limited liability company
Limited liability companies must have at least one director and a company secretary. Anyone running a pub using a limited liabilty company will be regarded as employees of the business, and not self-employed. Licensees will normally appoint themselves as company directors and will also own the business through the shares that they own in it. Directors may be paid a salary and any business profits can be distributed to its shareholders in the form of a dividend payment.
Tax and National Insurance
Companies pay corporation tax based on the level of profit they earn. The company also has to pay employer’s Class 1 National Insurance contributions for all its employees. Directors will be taxed on their salaries and pay Class 1 National Insurance contributions (PAYE). In their capacities as shareholders they may also be taxed on their dividend earnings.
