Company vs sole trader

Are you thinking of starting a business as a limited company or turning your existing business into a limited company?

If yes, you may wish to consider the "pros" and "cons" of doing so.

The main advantages are:

the saving of tax and National Insurance contributions (see table below)
limited liability
enhanced standing in the business community
ability to easily divide interests in the company in the form of shares between members of the company.

For the year to 5th April 2009, the annual tax and N.I. savings are:

So why isn't every business incorporated? Well, you also need to consider the following:-

One-off set up costs for the company - about £250.
Opening new bank accounts and the transfer of standing orders and director debits.
The need to keep personal funds separate from company funds.
Regular management accounts may be required to determine what dividends can be paid.
Administration costs, including payroll for the directors, may be higher but usually no more than £500 p.a.
Publication of the accounts at Companies House.
In certain situations, the company may be subject to "IR35" tax.
Company or private ownership of the car.
Pension contributions may need to be reviewed.
If the tax law changes, can we disincorporate without severe tax consequences?

To cope with all of the above points and still have the tax advantages contact David Cane on 020 8390 6878.