Trading as a company became very popular from 2002 when it became possible even for the smallest businesses to make worthwhile tax savings and avoid high national insurance contributions by incorporating.
Since then, changes to the taxation of company profits have reduced the tax savings. Proposed changes (see below) will reduce the potential savings further. Incorporation can still have tax benefits but for the very smallest businesses they may no longer be worth the costs involved.
This guide shows how becoming a company – incorporation – could save tax and considers the other advantages, the disadvantages and the process of incorporation. Incorporating a business is a major step, which may be expensive to reverse. This short guide can only highlight the main issues. You should always take professional advice based on your own circumstances.Last Updated
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