Benefits of Incorporation

As well as the reassurance of limited liability there are substantial tax savings to be gained from incorporating a business.

Operating as a sole trader results in a business having to pay income tax and class 4 national insurance on whatever profits are earned in a given period.

Incorporation allows a business owner to withdraw funds from his or her business in a much more tax efficient manner.  In most cases, if taxable business profits for the year are below £300,000 then the company will pay corporation tax at just 20% on those profits.  A shareholder then has the ability to draw some funds out of the business by way of dividends with no additional tax to pay. Please contact us to advise of the latest rates of tax and how our planning could be beneficial to your business.

There is also the possibility of valuing the goodwill arising on the sale of the sole trade or partnership business to the new limited company.  This could result in an amount becoming due to the former sole trade or partner in respect of the transfer of that goodwill to the limited company at a reduced or even nil tax cost.  The director / shareholder can then withdraw funds from the company with no additional tax to pay.

If you would like to discuss this further then please contact us for a free no obligation meeting to review your situation and how you may benefit from incorporation.