Transfer to a Limited Company (Incorporation)

Contemplating a change in the legal status of your business? There are several factors you need to take into account.

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Transfer to a Limited Company

As your SME experiences success, you may reach a stage where transitioning your business structure from a 'sole trader'/'partnership' to a 'limited company' (LTD) becomes necessary for taxation and administrative reasons. The process of incorporation can be intricate and demanding, involving strategic decisions that require careful consideration. Seeking practical assistance at this juncture is advisable.

Limited Company

What is incorporation?

The term 'Incorporating' a business refers to the process of transforming your sole trader or partnership status into a limited company. This is a common step for many businesses, especially during periods of growth.


What are the benefits?

There are broadly two benefits to incorporating a business. Firstly, unlike a sole trade or a partnership, a limited company is a separate legal entity; in most cases, this means the personal assets of the shareholders and directors are not at risk in the unfortunate event of a business liquidation or litigation action against the company by a third party.

The other significant benefits can be obtained in the taxation advantages offered by this arrangement, some of the more common examples being:

Profits retained for reinvestment in the business are subject to lower corporation tax rates, as opposed to the higher income tax rates and national insurance.

The total tax payable on profits extracted from a business is often lower from a limited company, as the taxpayer can avoid national insurance contributions by distributing profits as a mixture of salaries and dividends to shareholders.

Other avenues for extracting funds from the business in a tax-efficient manner may be available that are not accessible to sole traders and partnerships. These include interest on directors' loans, rental income for the use of personally owned assets, and the provision of certain benefits-in-kind that are exempt from charges to income tax on the director.


Who should contemplate incorporating their business?

All individual cases are different, but the benefits to incorporation are typically greater as a business grows larger, although small businesses can still reap the rewards that come from trading through a limited company. Any individual with a sole trade or a share in a partnership should consider whether this is the best way forward for their business.


Should I incorporate my business?

When considering if incorporation is the right move for your business, there are several factors to take into account. Generally, if you’re looking at the possibility of a change of status, your business is typically experiencing significant growth, allowing taxable efficiencies to be made and the possibility of taking advantage of other significant benefits. However, it should be noted that for some businesses, it is beneficial to remain as they are. Contact us today to see how we can help you with your business needs.

Whatever your situation, our team of tax advisers in UK can help you ensure your incorporation is completed correctly. Contact us today for further advice or to discuss the next steps by calling us on +92 302 4012116 or emailing contact@leewopconsultancy.com.


Why choose Leewop for your incorporation requirements?

While incorporating a business is a reasonably straightforward process, careful attention is needed to ensure the various elections to HMRC are applied for. This helps avoid unnecessary income tax charges in the tax year when the process is completed. Our tax advisers can assess your individual circumstances and guide you on the best way to incorporate your business.

At Leewop, our chartered tax advisers specialize in incorporation and can provide you with all the advice you need. We aim to simplify your obligations, allowing you to focus on what matters most. Our offerings include:

  • A dedicated tax department with a wealth of experience and expertise
  • Tax consultants who are Chartered Tax Advisers, ensuring sound and up-to-date advice
  • A single point of contact, so you aren’t being passed from pillar to post
  • A reliable, professional, tailored and personal service
  • Digital expertise to deliver efficiencies through advanced technology solutions
  • UK -based tax advisers with national and international reach

With Leewop, not only will you be compliant with laws and regulations, but you will also be assured that our team will recognise areas for improvement, such as structuring your finances in the most efficient way and making sure you take advantage of reliefs and allowances available to you.

What’s next?

Arrange a consultation to find out how we can help you. Call us today on +92 302 4012116 or email contact@leewopconsultancy.com.

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Transitioning to Leewop from your current accountant is a swift and straightforward process.

Leewop is a prominent accountancy practice in the UK, catering to clients nationwide. Regardless of your location, we are here to assist you. We will allocate an accountant to help you grow your business and enhance its efficiency. Contact us to discover how we can assist you today.

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