The issue of whether to run your business as a company or a sole trader or partnership is an important one. In this factsheet on incorporation, we summarise the pros and cons of operating as a company including outlining the potential tax savings available from operating as a company.
Should you Incorporate your business?
There may be a number of good reasons for considering the use of a company as part of an effective tax planning strategy. However, there are many factors to consider, so we would strongly advise that you seek professional advice before taking any steps – the DRG Chartered Accountants team would be delighted to discuss your personal circumstances and the advantages and disadvantages of incorporation for you and your business.
In this fact sheet on "Incorporation", we will consider:-
- Is trading as a limited company the best option?
- Is it better to take a dividend rather than an increase in salary?
Incorporation and tax issues
- Summary of relevant tax and national insurance (NI) rates 2020/21
- Pension provision
Incorporation and other tax issues
- Capital gains
- Relief for goodwill
- Property taxes
- Income tax
- Capital allowances
Non-tax advantages of incorporation
- Limited liability
- Legal continuity
- Transfer of ownership
- Pension schemes
- Staff incentives
Disadvantages of incorporation
- Administrative burden
- Transactions with the business owner
- Director's responsibilities
The decision whether to incorporate or not is a complex decision. If you would like to discuss your personal circumstances further, please do not hesitate to get in touch with the team at DRG Chartered Accountants.
DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.