• Swindon & Wiltshire Experts
• Wednesday March 5 2025
• Author Name: Luke Rudman

Should you incorporate your business? – Charlton Baker

Thinking of incorporating your business? Here are some things to consider first, says Luke Rudman of Charlton Baker

Incorporation is the process by which a new or existing business registers as a limited company. If you are thinking of incorporating your business, consider the following:

Protection of company wrapper

A limited company is a separate legal entity, which in turn protects your personal assets from business debts and liabilities. This means your personal finances remain secure if the business faces financial difficulties.

Tax savings

There are tax advantages to trading as a limited company. Limited companies pay Corporation Tax on trading profits at a maximum rate of 25 per cent; for smaller companies (profits being £50,000), this can be 19 per cent.

A further point to consider is dividends distributed to shareholders; these are not subject to National Insurance, potentially providing a more tax-efficient method of remuneration.

Responsibilities of running a limited company

There may be some additional administration tasks and costs, for example:

• Compliance: registering with Companies House, filing annual accounts, and submitting confirmation statements are mandatory
• Record Keeping: maintaining detailed financial records is essential to meet legal obligations
• Costs: expenses including registration fees and potential professional services for compliance.

Professional Image and Credibility

By trading through a limited company structure, this can enhance your business’s credibility, potentially attracting more clients and opportunities.

Business Growth and Investment

Incorporating into a company allows for business expansion by:

• Equity Sharing: issuing shares to raise capital from potential investors
• Succession Planning: multiple ownership transfer options, ensuring continuity of the business.

Luke Rudman is group chief integrations director at Charlton Baker, which offers accounting, taxation, business and legal services under one roof.