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

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more Read more

Married couple’s allowance

Married couple’s allowanceThe married couple’s allowance (MCA) is only available if one of the two spouses or civil partners was born before 6 April 1935. This means that one member of the couple must be at least 89 years old on 5 April 2024 to qualify for an allowance in the 2023/24 tax year.There

14 Jul 2020 12:13 | Produced by Tolley Read more Read more

FRS 102 ― tax presentation and disclosures

FRS 102 ― tax presentation and disclosuresPresentation of tax under FRS 102An entity must present changes in a current tax liability (or asset) and changes in a deferred tax liability (or asset) as a tax expense (or income) unless the item creating the current or deferred tax amount is recognised in

14 Jul 2020 11:46 | Produced by Tolley in association with Steve Collings Read more Read more