Incorporation ― overview

Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax, part of AMS Group
Owner-Managed Businesses
Guidance

Incorporation ― overview

Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax, part of AMS Group
Owner-Managed Businesses
Guidance
imgtext

Many businesses commence in an unincorporated form as a sole trade or a partnership. Start-ups benefit from the simplicity and low administration provided by an unincorporated structure. Relief for opening years’ losses are also significantly more favourable for sole traders and new partners. Even once a business has become established, operating in an unincorporated form has benefits and may continue to suit the proprietor(s) indefinitely.

However, there is a distinct path for growing businesses whereby incorporation becomes a natural step.

Key reasons to incorporate

The key reasons in favour of incorporation tend to be:

  1. limited liability allowing the mitigation of commercial risks against personal assets

  2. tax mitigation (mainly, to the extent to which profits are retained/reinvested in the company)

  3. flexibility over income in respect of the timing and form of remuneration

  4. a greater ease of attracting external investment ― for instance certain tax reliefs are only available to companies, see the Calculating the tax benefits of incorporation guidance note

  5. prestige value

Limited liability means that the members of a company (ie the

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Rob Durrant-Walker
Rob Durrant-Walker linkedinicon twittericon

Tax Director at Crane Dale Tax , Corporate Tax, OMB, Personal Tax


Rob is a cross-tax advisor with a particular focus on property tax planning, and business structure planning for OMB’s. He provides tax advice to other accounting firms, balancing commerciality, ethics, and understanding complexity. His 30+ years of experience start at the Inland Revenue in Hull. After completing his ATT and CTA by 1999 with PKF, he subsequently worked at KPMG and UHY prior to managing the business tax team as a director at Garbutt + Elliott. Rob is now Tax Director at the independent tax consultancy, Crane Dale Tax. He is a regular author for Taxation magazine with many articles and Readers Forum contributions since 2005, and he contributes as a virtual member to the CIOT Property Tax technical committee. Rob works remotely from Vancouver in Canada.

Powered by Tolley+

Popular Articles

Transferable tax allowance (also known as the marriage allowance)

Transferable tax allowance (also known as the marriage allowance)What is the transferable tax allowance (marriage allowance)?From 6 April 2015, an individual can elect to transfer 10% of the personal allowance (£1,260) to the spouse or civil partner where neither party is a higher rate or additional

14 Jul 2020 13:52 | Produced by Tolley Read more Read more

Corrections and amendments to the IHT account

Corrections and amendments to the IHT accountThis guidance note explains how to deal with changes to the taxable values in the original inheritance tax account.Why do amendments arise?When the IHT account is first submitted to HMRC, it is based on information available at an early stage of the

14 Jul 2020 11:20 | Produced by Tolley Read more Read more

Holding companies ― VAT status of activities

Holding companies ― VAT status of activitiesThis guidance note examines how to determine the VAT status of a holding company’s activities. In particular, it looks at:•when a holding company is or is not in business•if a holding company is in business, whether its activities are exempt or taxableThe

14 Jul 2020 17:13 | Produced by Tolley Read more Read more