Jennifer Adams considers the advantages and disadvantages of incorporation.
Anyone starting a new business needs to decide which legal structure is best suited to the particular type of business being created, taking into consideration all the issues involved for each type, including the potential liability for any future business debts and the tax implications of their chosen structure.
Growing the business
It is invariably the case that a sole trader or partnership commences in business and the business grows such that the matter of incorporation needs to be considered. Although the decision to incorporate should be for commercial reasons rather than tax savings, any tax savings that may result need to be factored into the decision.
When a limited company is formed a new entity is created. Legally, this entity is separate from all other individuals,