Jennifer Adams provides an overview of the benefits of incorporation.
When starting in business, it is usually as self-employed or as a partnership. As the business grows, working through a company may be considered for several reasons (limited liability being one of the more important).
Tax is no longer a precursor to incorporation. Until recently, the tax rate for companies was low compared with remaining self-employed or in a partnership. However, over the past few years, tax rates have become increasingly realigned such that depending on the profit level and how withdrawals are made, together with the increase in corporation tax rates as of 6 April 2024, it may no longer be tax-beneficial to be incorporated. Every situation is different, and calculations are the only way to decide.
Incorporation relief
Incorporation involves disposing of a self-employed
