Starting and managing a digital marketing business can be overwhelming, and it comes with its own set of challenges. One of these challenges is choosing the right legal structure for the business. This is understandable as there are several structures to pick from, one of the popular options being a limited company.

Are you a digital marketer looking to create a limited company? In this article, we explored in detail all you need to know to clarify your questions about what the limited company structure holds for your business. From the definition to reasons and benefits of creating a limited company for digital marketers, down to the step-by-step process to get it done. After reading this article, you will be able to make an informed decision on what to do. Let’s dive in!

Understanding the Limited Company Structure as a Digital Marketer

Digital marketers who are starting their business often wonder whether they should set up a limited company. A limited company runs on a legal structure that makes businesses become a limited liability.

Being a limited liability means that shareholders or members of the limited company are not personally responsible for any debts or liabilities incurred by the business. Simply put, if the company experiences financial difficulties, creditors cannot hold the business owner accountable or force them to use personal assets to manage these debts.

By definition, Limited companies are often referred to as "separate legal entities" because they are legally distinct from their shareholders or members. This distinction offers several advantages for digital marketers looking to set up their own business. One significant benefit is that business owners retain ownership of all their assets.

Another advantage is that business owners can enjoy all the profits made by the business, after tax. Additionally, the personal assets of the owner are protected by the limited liability of the company, which is especially important in the event of financial instability.

Setting up a limited company also provides flexibility in carrying out new business activities. Business owners can grant shares in the company to employees or other interested investors. Plus, they can pursue new activities without having to worry about them appearing on personal tax returns.

It's important to note that business owners are only liable to pay off the amount that's equal to their initial investment in the event of a financial crisis. This means that business owners will never need to pay more than their initial investment to cover the company's debts or liabilities. For instance, if an individual invested £2,000 in a limited company and incurred a £8,000 loss, their liability would be limited to the initial investment of £2,000.

Why form a Limited Company as a Digital Marketer?

One among other reasons small business owners form a limited company is quite simply to be taken seriously. Here are some of the reasons why setting up a limited company is great for your digital marketing business:

It makes your digital marketing business big

As a digital marketer, one thing you will admit is that getting started in business can be challenging. In fact, finding your footing in the first year can be particularly overwhelming because you need to earn the trust of people. One way to earn this trust and attract customers is by appearing big, and forming a limited company is one sure way to do this.

By setting up a limited company, you can be perceived as more established and credible compared to a sole trader or an unregistered company which many clients tend to avoid due to their small size. The size of your digital marketing business does matter – the bigger it is; the less risky people find it to deal with you.

It Helps you Earn the Right Perception and Keep Hold of Assets

Another significant reason for creating a limited company as a digital marketer is the power of perception that comes with it. Just as clients trust and prefer to deal with established and large companies, bringing your digital marketing business into the category of limited company, will make them also perceive your business to be both capable and reliable.

This is in addition to the fact that forming a limited company allows you to retain ownership of your assets and earn all the company's profits post-tax. Moreover, limited liability protects your personal assets from creditors if the company incurs debts or liabilities.

Easy Access to Partnerships and Big Customers

Those in the business-to-business (B2B) and Business-to-customer (B2C) sectors find it particularly challenging to get big customers. As a digital marketer in this category, you are not exempted. Most established companies and larger organizations have policies in place regarding which companies they enter into contracts with.

Sole traders or unincorporated businesses generally do not fall within the spectrum of preferred companies. Therefore, a limited company with "LIMITED" or "LTD" in the name may be more attractive and increase your chances of working with established prominent organizations and corporations.

What Are the Benefits of Having a Limited Company as A Digital Marketer?

Statistics from Company House in the UK have shown that 4 million+ small businesses have been incorporated, with close to 93% of that share being active. This reveals that while it may be easier to join the league of sole traders, one-person businesses, and unregistered companies, forming a limited company is still very relevant today.

Hence, having considered the main reasons people form a limited company, and why a digital marketer should consider it, it is important to show you in detail the benefits of creating a limited company.

You Get Protection Through Limited Liability

Setting up a limited company offers limited liability protection for your digital marketing business. This protection ensures that you are shielded from the financial risks involved in taking personal responsibility for your company's debts. Instead, this risk is shared by third parties such as clients and suppliers in partnership with the business, thus ensuring personal assets are safeguarded.

This benefit is a crucial distinguishing factor between sole traders and limited companies.

But how is this possible? Well, since 1897, there has been legal recognition of limited companies as separate entities from directors and shareholders. This shows the significance of forming a limited company, as directors are protected from personal liability for the company's debts, limited to the initial investment made in shares and unsecured loans extended to the company.

The only condition that renders this benefit null and void in the face of a financial crisis (so that directors are not protected from personal liability for the company's losses), is in the instance of proven fraudulent activities.

In contrast, for sole traders, their business and personal assets are linked for taxation and administrative purposes, placing their homes and other personal assets at risk in the event of business failure.

Tax and National Insurance efficiency

For small business owners including digital marketers, tax efficiency is a crucial aspect of financial management. Optimal tax liabilities and National Insurance Contributions (NICs) can be achieved by creating a limited company, while simultaneously bolstering credibility and reputation.

A limited company structure allows directors to structure their remuneration using a modest salary and dividends, avoiding the burden of employer and employee NICs, preserving State Benefits entitlements, and reducing tax exposure. Additionally, amidst recent changes in tax regulations, limited companies remain a tax-efficient choice for digital marketers.

Improved Reputation/Credibility

Establishing credibility and reputation in the competitive industry of digital marketing is essential for securing new opportunities and fostering trust among clients. A limited company conveys a sense of professionalism and reliability, signifying that the business is well-organized and structured.

Some stakeholders (clients) prefer to deal exclusively with limited companies, highlighting the importance of the limited company structure in unlocking new avenues for business growth and expansion. This is something to take advantage of in your digital marketing business.

Formation of Limited Companies is Streamlined and Cost-Effective

Many aspiring entrepreneurs by wrong misconception consider the process of forming a limited company as a difficult bureaucratic obstacle to conquer, hence see it as a process that requires much time, financial, and mental investment to do.

However, with modern-day online registration platforms, the incorporation of a limited company can be accomplished in a matter of minutes and with minimal financial resources. Yes; a process you can compare to a takeaway meal or even a free snack.

Enhanced Access to Financing Opportunities

Unlike sole traders, limited companies have unique legal entity status and can leverage this to access different funding/financing options.

With this business structure, companies can issue new shares to shareholders and investors, thereby accumulating much-needed capital to support their business growth and expansion initiatives.

Financial institutions also consider limited companies to be risk-averse, which guarantees easier access to loans and other financial facilities.

Ease of Business Ownership Transfer

One compelling benefit of opting for a limited company structure is that it makes it much easier to sell or transfer business ownership. Compared to unincorporated business entities, transferring or selling business ownership of a limited company is considerably smoother.

With a limited company, assets, contracts, and equipment can be seamlessly transferred, offering much greater flexibility and continuity. In contrast, sole traders face ownership transfer challenges as their business assets are typically personally owned, and the business is closely tied to their individual identity.

Securing of Trading Name

Upon registration with Companies House or registration services, a limited company's trading name is legally safeguarded, providing the business an advantage. In contrast, sole traders lack this level of protection, which makes them vulnerable to the unauthorized use of their trading name by competitors or malicious entities, jeopardizing the business's reputation.

Protecting Trading Name for Future Business Ventures

For digital marketers who have brilliant business ideas but lack the resources to implement them, creating a dormant company offers a solution to safeguard business concepts and their trading names.

A dormant company is recognized by Companies House and the HMRC as a company that remains inactive and doesn't engage in significant financial transactions throughout the fiscal year.

By establishing a dormant company, a digital marketer can preserve their business ideas while protecting the business's trading name from unauthorized use by competitors or malicious entities. Annual filings are required to maintain the dormant status, ensuring that the company's future interests are secured.

How to Set Up a Limited Company as A Digital Marketer

Have you resolved to set up a limited company for your digital marketing business? If you have, it can be a huge milestone for you, and regardless of what you may have heard about the process, it's important you know that it is doable. To help out, here's a detailed guide on how to efficiently establish a limited company tailored for digital marketers:

1. Choose a Name for your Digital Marketing Company

Selecting a compelling name is pivotal for branding and recognition. Here are a few tips to consider in limited company naming:

• Memorability: Opt for a name that is easy to recall and spell. One that will enhance your brand visibility.
• Domain Availability: Looking at the digital industry, securing an available domain name aligned with the company name is crucial. So ensure your domain name needed for your company website is available.
• Research: Conduct thorough searches on Google, Companies House register, and the Intellectual Property Office (IPO) to ensure the chosen name is unique and not already in use.
• Avoid Misleading Terms: Steer clear of terms that may mislead potential clients, such as claiming certifications or qualifications not possessed.

2. Prepare Essential Documents

Preparing crucial documents before establishing a limited company ensures legal compliance and helps you streamline the entire process. These essential documents include; the Memorandum of Association (MoA), Articles of Association (AoA), and Form IN01.

The MoA contains crucial company information such as the name, ownership structure, management responsibilities, and shareholders' details. It outlines the company's purpose and how it operates. On the other hand, the AoA specifies essential details such as the roles, responsibilities, and procedures for decision-making and shareholder activities.

For FormIN01, it includes details of your guarantee, compliance, resources, proposed officers, and capital. This form is usually requested by the UK government for your registration.

3. Selection of Company Officers

Carefully selecting suitable individuals to oversee daily operations and strategic direction is critical for the success of a limited company. The company officers include directors, responsible for managing operations, handling legal compliance, and annual reporting.

Also, a limited company for your digital marketing business must have at least one director. Secretaries act as representatives of directors, preparing meeting minutes, and maintaining records. Shareholders own shares and may have voting rights on significant company decisions.

4. Choose How to Register your Limited Company

When deciding on how to register a limited company as a digital marketer, you have three primary options to choose from. These options include self-registration, hiring an accountant, or utilizing a company formation agent. Each option has its advantages and disadvantages that you should consider carefully before making a decision.

• Self-Registration: If you decide to self-register your limited company, you can potentially save money. However, it requires a basic understanding of company registration processes and documentation requirements, like the Articles of Association. This option may take time and knowledge, which may limit its suitability for some digital marketers.
• Hiring an Accountant: You can choose to hire an accountant who offers valuable expertise in financial management. They can assist you in tasks including establishing a business bank account and preparing annual accounts. However, their specialized services may incur additional costs, which may affect your budget, particularly if you specialize in a particular industry.
• Using a Company Formation Agent: A company formation agent is an intermediary who specializes in setting up companies and manages administrative tasks on your behalf. While this option may attract higher costs, it provides peace of mind by ensuring that accurate paperwork is handled correctly and promptly. Company formation agents can help you navigate the process and ensure that you comply with relevant laws and regulations.

Advantages and Disadvantages:

Self-Registration: Offers potential cost savings, but requires time, knowledge, and understanding of company registration processes.

Hiring an Accountant: Provides valuable financial management expertise but may attract higher fees, especially for specialized services.

Using a Company Formation Agent: Ensures accurate and timely paperwork submission, minimizing potential complications and challenges. However, this option may attract higher initial costs.

5. Registered Office Address

Again, to register your business at an address in England, Scotland or Wales, you will need to complete an application form through Companies House. You will be required to provide proof of ID and sign an oath that you are not disqualified from starting a company.

Once you have completed the application form and submitted it, you will receive confirmation that it has been received by Companies House no later than a week. It usually takes around 8 to 12 days for a company formation certificate (CFC) to be issued by Companies House after they receive your documents if the process is done via post. Online applications receive their confirmation in as little as 24 hours.

Hence, when setting up your limited company as a digital marketer, it's crucial to register a physical address in England, Scotland, or Wales. Here are some essential aspects you should consider when registering your registered office address as a digital marketer:

• Application Process: You must submit an application form provided by Companies House to register your business at a specific address. This process will require you to provide proof of your identity and certify that you are permitted to start a company.
• Submission and Confirmation: After you have submitted the application form, Companies House will confirm that they received your application within a week. If your submission is via post, it will most likely take eight to twelve days before they issue you with a Company Formation Certificate (CFC). But, if you applied online, you would receive confirmation in as little as 24 hours.
• Critical Considerations: Proof of identity: You must have valid identification documents to verify your identity.
• Confirmation Timeframe: The duration for the confirmation differs depending on whether you submit your application online or via post.

Benefits of Registering a Registered Office Address

• Legal Requirements: Legal compliance necessitates registering a physical address in Wales, England, and Scotland for your limited company’s operations.
• Professional Image: Registration of an office address polishing the reputation of your business image and adds some degree of professionalism.
• Mail handling: A registered office address guarantees that all official correspondence and legal documents are obtained without delay or unauthorized access.

After considering the requirements, benefits, and key considerations, you'll have the necessary information to register your limited company's registered office address in England, Scotland, or Wales.

Need help forming your company today?

Incorpuk is a licenced company formation agency. Incorpuk offers a range of fast and efficient online company formation services, allowing you to register a business structure of your choice quickly. To get started, kindly contact us here.

Frequently Asked Questions by Digital Marketers on Limited Company

As a digital marketer thinking of setting up a limited company, you may have some questions about the process and implications of selecting the business structure. To help your curiosity, here are some frequently asked questions and the detailed answers:
1. What is a private limited company?
A private limited company is a unique legal entity that possesses its assets, liabilities, profits, and losses, differently from its officers. It protects the company officers' assets from company liabilities, which differs from sole traders or partnerships.

2. What are the advantages of choosing a limited company business structure?
A limited company offers advantages that include; limited liability, comparable costs and administrative requirements to sole traders or partnerships, Enhanced confidence from suppliers and creditors, and facilitating the sale of shares to generate capital.

3. Who can set up a limited company?
Anybody can set up a limited company regardless of nationality, except if they are undischarged bankruptcies, restrained by court order, or subject to UK government restrictions.

4. Can individuals outside the UK set up a new company?
Yes, any individual outside the UK can establish a company, but the company's registered office address must be in England, Wales, Scotland, or Northern Ireland.

5. What information do I need to set up a limited company?
To set up a limited company, you need a unique company name, registered office address, at least one director and shareholder, information for each director, secretary, and shareholder, optional secretary, and credit card details for payment.

6. How do I choose a name for my company?
When selecting a name for your company, ensure that your choice is unique, not offensive, does not resemble governmental and local authority entities, and avoids certain sensitive words.

7. Does registering my company name protect my trademark?
No, registering your company name does not protect your trademark. Registering a company differs from trademark registration, contact the IPO or visit their website for further guidance on trademark protection.

Final Note

Commencing a digital marketing business is an exciting venture, but not without ups and downs. But while starting has its challenges, scaling up demands even more smart decision-making to ensure its longevity. Among the crucial decisions is selecting the legal structure of the business. The selection process can seem intimidating as there are various structures to choose from, including sole proprietorship, partnership, and limited company. Among these options, the limited company structure stands out as a beneficial choice for digital marketers.

While beginning your digital marketing venture as a sole trader or one-person business can be a suitable option, transitioning to a limited company structure can offer unmatched opportunities for growth and expansion. By becoming a limited company, business owners enjoy increased protection of personal assets, tax efficiencies, and a professional reputation. Finally, the ball is in your court, do your reviews, consider your findings in this post, and make a decision that will position you better for long-term success and the benefits of a professional business entity. Need help forming a limited company in the UK? Incorpuk can help you achieve this goal. contact us here today for more details.