Thinking of making the move from sole trader or partnership to a limited company? At Page Kirk, our experienced team of chartered accountants and tax advisers will guide you through every step ensuring the transition is smooth, tax-efficient and structured with your long-term goals in mind. Based in Nottingham and supporting businesses nationwide, we’ve helped many successful SMEs make the move to limited company status at the right time and in the right way.
If your SME is proving successful, you will most likely come to the point where you will need to consider incorporating your business from a ‘sole trader’/’partnership’ to a ‘limited company’ (LTD) for taxation & administrative purposes. The process of incorporating your business can be complex and challenging, with a number of strategic decisions to be considered carefully. It’s therefore prudent to obtain practical assistance at this time.
If your SME is proving successful, you will most likely come to the point where you will need to consider incorporating your business from a ‘sole trader’/’partnership’ to a ‘limited company’ (LTD) for taxation & administrative purposes. The process of incorporating your business can be complex and challenging, with a number of strategic decisions to be considered carefully. It’s therefore prudent to obtain practical assistance at this time.
Profits retained for reinvestment in the business are taxed at the lower corporation tax rates, as opposed to the higher income tax rates and national insurance.
The total tax payable on profits extracted from a business is often lower from a limited company, as the taxpayer can avoid national insurance contributions by distributing profits as a mixture of salaries and dividends to shareholders.
Limited companies offer additional ways to extract funds, such as interest on directors’ loans, rental income from personal assets, and certain tax-exempt benefits-in-kind for directors.
All individual cases are different, but the benefits to incorporation are typically greater as a business grows larger, although small businesses can still reap the rewards that come from trading through a limited company. Any individual with a sole trade or a share in a partnership should consider whether this is the best way forward for their business.
When considering if incorporation is the right move for your business, there are several factors to take into account. Generally, if you’re looking at the possibility of a change of status, your business is typically experiencing significant growth, allowing taxable efficiencies to be made and the possibility of taking advantage of other significant benefits. However, it should be noted that for some businesses, it is beneficial to remain as they are.
Incorporating a business is a reasonably straightforward process, but due care and attention needs to be made to ensure the various elections to HMRC are applied for, so that you do not incur unnecessary income tax charges in the tax year in which the process is completed. Our tax advisers can assess your individual circumstances and advise you on the best way to incorporate your business.
From ensuring that you comply with your statutory requirements, to navigating the scaling-up of your business, through to effective profit extraction and dealing with your tax affairs, Page Kirk Nottingham accountants are here for you every step of the way
Page Kirk is a leading accountancy practice in Nottingham, but we service clients across the country, so wherever you are based, we can help. We will assign you an accountant to assist you in growing your business and improving its efficiency. Contact us to find out how we can help you today.
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