Limited Companies within the Beauty Industry

By Heidi Chloe Hayley

Describe the legal status• A limited company:• Is a private company whose owners are legally responsible for its

debts only to the extent of the amount of capital they invested.• The legal status of your business can depend on the type and

scale of business that you are going to set up, you will also need to consider the tax implications. If your enterprise has social aims you may also consider setting up a social enterprise or community interest Company.

• For example: beauty equipment would also come under the cost of starting a business. As this equipment can be reasonably expensive and prove to exceed initial capital investments.

Which Regulation would you consider when starting the business

• If you require substantial start up funding, this form of company structure can provide protection. However directors may be required to give personal guarantees in order to secure funds. This includes things such as insurance for5 items and contents as well as the business as a whole, such as public liability and data protection acts as regulations when building a beauty business.

• It may be more beneficial to set up a limited company from a tax perspective, but this is dependent on your personal circumstances and earning potential.

• Controlled waste regulation

• Trade description act

• Health and safety

• Cosmetic products

• Electricity at work

Swot analysis of a Limited Company

• Strengths • · Limited liability for debts.

• · Organization may have an unlimited lifespan.

• · Capital can be raised by issuing shares.

• · A board of directors and management team control the business.

• · Directors are salaried and pay tax in the normal way (along with class 1 National Insurance Contribution).

• · The business may be perceived as more professional than sole trader status.

• • Weaknesses

• · Costs associated with setting up and administering the business are higher.

• · Stringent accounting and auditing procedures apply• • Opportunities• Organization may boom, and be able to expand further

• Threats:• Threats to the business may happen, if costs are high and money is not monitored by staff and pushed and promoted in order to pay expenses.

Assessing the structure of a limited business

• OwnershipEvery limited company has ‘members’ - people or organizations who own shares in the company. Directors are responsible for running the company. Directors often own shares, but they don’t have to.

• Legal responsibilities:There are many legal responsibilities involved with being a director and running a limited company. Most limited companies are ‘limited by shares’. This means that the shareholders’ responsibilities for the company’s financial liabilities are limited to the value of shares that they own but haven’t paid for.

Evaluation

Overall in the beauty industry a limited company can be good because it can be set up quickly to be competitive in its industry, and they can be found world wide, they also can raise capital by selling shares and encouraging members to join. It is a private company whose owners are legally responsible for its debts only to the extent of the amount of capital they invested.However they can be unsuccessful due to expenses.