But when is the right time to incorporate as a Limited Company? Remember every business is different, but here are some ideas on when that time might be:
- You have been Self-Employed and your profits have grown considerably each year – if you incorporate you could be saving tax.
- Due to the limited liability protection of a company, risks can be mitigated to the amount that you invest into the company.
- For some, operating as a limited company can project more credibility to the outside world, and that could be clients, partners or potentially lenders if you wanted to secure finance for your business at some stage. It is still a personal decision.
- If you earn over £150,000 and are still a sole trader, you will be subject to paying 45% of your overall income over that threshold, as opposed when you incorporate, because you will pay 19% in corporation tax of your company earnings.
In other words, incorporating could work well for you. It’s always worth discussing your personal circumstances with your accountant, and if you don’t have one (or are looking for a change) we are happy to help.
Have any questions about getting incorporated? Find your local AIMS Accountant to help you figure it out. We are business accountants for business people.
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