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How To Become A Paper Millionaire - Quickly
As discussed in "How to get a guaranteed income of £100,000 per year", you can get a lot of operating capital by forming a Public Limited Company and issuing shares to raise money.
You can issue shares to third parties, and also give yourself as many shares as you like. As per the example in the above mentioned guide, if you issued yourself with 300,000 ordinary shares which eventually obtained a market price of £4 per share, you would be worth £1,200,00 on paper.
One of the many advantages of forming a limited company is that the company is recognised as a separate trading entity to it's owners and liabilities created by the company need not be underwritten by the personal wealth of the owners.
We must point out ,though, that an ordinary limited company cannot sell shares to the general public: to do so would require it to "go public", that is, to become a public limited company. Small and newer limited companies may have difficulty obtaining a full stock market listing, but they may take up the option of becoming public without a full stock market listing. This method is called joining the Unlisted Securities Market.
The Unlisted Securities Market allows your company to go public whilst only making as little as 10% of the capital available to shareholders. The five years of records that are required to become fully listed on the Stock Exchange are also not needed, and the advertising requirements are also much less.
If you operate as a sole trader or as a partner, you and your partners, where applicable, are personally responsible for all the debts and other liabilities of your business. If your
business was to fail with large debts, you could end up having personal property taken from you by Court Order, even loosing your home if it were required to satisfy large debts.
With partnerships, partners are jointly and severally liable, so each of you is responsible
for any of the debts created by any of the other partners. This could to lead to problems where a partner incurs debts of which the other partners are not aware. It is possible for a partner to run off with the assets and leaving the remaining partner(s) to suffer the consequences. If trading as a limited liability company you will not face these dangers.
A limited liability company can do business in the same way as a sole trader or partnership, but has certain advantages: if you have to go into liquidation you do not have to pay any of the debts of the company from your own pocket. The only liabilities which you can be held responsible for are back taxes.
By raising capital by the sale of stock, thousands of pounds in bank interest charges can be saved by not raising the cash from a bank. Sole traders or partnerships do not have this advantage.
Other advantages of the limited company lie in the tax field: Taxes paid by the individual directly to The Department of Social Services can be put into pension funds, and should you face company bankruptcy, you can write off up to £50,000 on a tax return, but not face any personal damage done to your credit rating.
In the U.K., you can employ a company formation agency to set up your limited company. These formation agencies advertise in the quality daily papers, Exchange & Mart and the Yellow Pages. Lists of agencies are also available from Companies House, Crown Way, Maindy, Cardiff, CF4 3UZ, Tel: 01222 388588, for England and Wales; Companies Registration Office, 100-102 George St, Edinburgh, EH2 3DJ, Tel: 0131 225 5774 for Scotland, and the Companies Registry, IDB House, 64 Chichester St, Belfast, BT1 4JX, Tel: 01232 234488 in Northern Ireland.
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