Incorporation ― introduction and procedure

Copyright © 2025 LexisNexis
Produced by Tolley in association with Julie Butler
Owner-Managed Businesses
Guidance

Incorporation ― introduction and procedure

Copyright © 2025 LexisNexis
Produced by Tolley in association with Julie Butler
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 a sole trader structure in particular. 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 risks associated with expansion

  2. •

    tax mitigation

  3. •

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

  4. •

    a reduced perception of the administrative burden due to familiarity with running a business

  5. •

    a greater ease of attracting external investment

  6. •

    prestige value

  7. •

    certain tax reliefs are only available to companies, see the Calculating the tax benefits of incorporation guidance note

Limited liability

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+™
TAKE A FREE TRIAL NOW
Julie Butler
Julie Butler linkedinicon twittericon

Managing Partner at Butler & Co Chartered Accountants & Registered Auditors 

Julie Butler FCA is the founding director of Butler & Co Chartered Accountants, a firm that specialises in agricultural and land matters. Julie has lectured extensively on proactive tax planning for farmers and landowners, with an emphasis on diversification and development.Julie and her team provide tax consultancy services direct to the farming and equine industry and to other accountants, land agents and solicitors on farming diversification, bloodstock and all areas of the equine world.Julie's articles are published in the national accountancy and tax press and she is the author of the successful books Tax Planning for Farm and Land Diversification and Equine Tax Planning as well as being co-author of Stanley: Taxation of Farmers and Landowners with Malcolm Gunn. Julie is also editor of Farm Tax Brief and contributes to Tolley's Tax Planning.Julie is an authorised individual licensed by the ICAEW to carry out the reserved legal activity of non-contentious probate in England and Wales.

Read moreRead more
Powered by Tolley+™
  • 24 Oct 2025 07:30

Home/ Tolley Tax Guidance/ Owner-Managed Businesses / Starting in business and incorporation

Popular Articles

Corporation Tax

Group relief for carried-forward losses

Group relief for carried-forward lossesThis guidance note examines in detail the relief available to groups for carried-forward losses. The scope excludes the treatment of specialist businesses such as banks, insurance companies and oil and gas companies.From 1 April 2017, companies can surrender

14 Jul 2020 11:50 | Produced by Tolley Read more Read more
Personal Tax

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
Corporation Tax

Research and development expenditure credit (RDEC)

Research and development expenditure credit (RDEC)This guidance note provides information on how research and development expenditure credits (RDEC) are calculated and utilised. The Qualifying expenditure for R&D tax relief guidance note provides information on what expenditure qualifies for

14 Jul 2020 13:24 | Produced by Tolley in association with Will Sweeney Read more Read more