4 Reasons Why You Should Incorporate Your Business
This question I get asked a lot from new and existing clients – whether they should incorporate their business or not. Of course, the answer depends on the individual’s circumstances. Some clients will need to incorporate from the commencement of trade while others may never need to incorporate at all. Let’s look at four reasons why a business might set up a limited company:
1) Cash Management
Incorporation for the majority of single entities won’t reduce your tax liability per se, however, it will allow you to better control the amount of tax that you pay.
Limiting your liability to the assets of the company provides peace of mind for a lot of entrepreneurs.
Investors want to receive something in return for their money – no better way than to give them a shareholding in proportion to their investment. This type of consideration won’t work by simply setting up as a sole trader. The use of Employment and Investment Incentive Schemes should not be overlooked either.
4) Tax Planning
Tax efficient terminations payments are available for working company directors who take retirement or redundancy from a company.
Future company directors need to be aware that incorporating a business brings a lot more administration than trading as a sole trader, which can lead to additional costs. These costs need to be factored in before making your decision to incorporate.
Luckily, help is always at hand from a good accountant!