Does anyone have experience of unlimited companies? I am looking to grow my self-employed bookkeeping / accounting business, and have just come across a possible new client: someone has set up a little retailing business as an unlimited company.
I believe such a business has to register at Companies House, like any other company, and I suppose they are liable to Corporation Tax on profits, in a similar way. What else should I know about such businesses? What advantages may there be in setting up such a company, as opposed to a limited one?
the fact that there is no limit to the liability of the owners of Unlimited companies makes them an unpopular option.
The advantages of unlimited is that (except for some exceptions shown below) they do not need to file accounts with companies house so performance is more confidential than with a limited company.
The exceptions to reporting requirements are (taken from the companies house website) :
Unlimited companies need only deliver accounts to Companies House if, at any time during the period covered by the accounts:
the company was a subsidiary undertaking or a parent of a limited undertaking; the company was a banking or insurance company (or the parent company of a banking or insurance company); or each of the companys members was: - a limited company; - another unlimited company each of whose members was a limited company; or - a Scottish partnership each of whose members was a limited company.
My view is that unlimited is a hybrid sort of entity that may once have been useful for large entities to hide corporate performance in an unincoorporated subsidiary but changes in consolidation reporting in the wake of Enron mean that such is no longer possible and to my mind Unlimited is now a pretty much defunct form of entity unless one has a reason that they are trying to hide their performance which to a large extent abreviated accounts for SME's do anyway.
If the client has no wish to be self employed which would seem a more obvious choice for a small retail entity then perhaps they should be told the advantages of limited over unlimited (namely limited liability of the owners) combined with a bit of reassurance in relation to the information available to the public in abreviated accounts.
Interested to read other peoples takes on unlimited as whilst it's something that I've heard of it's not a form that I've ever encountered in the real world.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks, Shaun, for your feedback. It's interesting to learn a little more about this kind of company.
In this instance, when I spoke to the potential client in question, it turned out that it was actually a sole trader. The client thought that, not being a limited company, she must be an unlimited one. I have explained how things work, outlined what needs doing, and it's up to her if she wants to get back to me (I know she's had one or two approaches from other people).
