Trading as a Limited Company. Is it right for you?
It has become fairly well established now that forming a company structure is a useful way to limit your financial liability and effect a tax efficient wrapper for conducting your business affairs. And certainly if you expect your net profit to be above £18,000 or so per annum, then taking the plunge to ‘go limited’ still makes some sense. The rate of corporation tax is now just 19% across the board and there is no Class 4 NI or payments on account for companies so that’s your company tax sorted, very simple.
As a director however you will need to pay yourself, and that’s where some clever calculations need to be made to ensure the best tax savings. Dependent on your particular financial circumstances we can formulate an efficient director’s remuneration package, comprising a mix of salary and dividend payments. The government introduced some major changes to dividend tax in 2017/18 and this does impact higher rate tax payers specifically, but even so there is no NI payable on dividends and you will still have far more flexibility in removing your capital from a limited company structure when compared to that of a sole trader. Plus your salary element is a business cost to the company, so you gain a wage and the business pays less tax - in contrast with drawings for a sole trader/partner which aren’t a business expense. Limited Company Setup includes: Evaluation of your chosen trading style for legislative and taxation compliance, plus guidance formulating a tax efficient Directors Remuneration structure. We will also register your company with HMRC for Corporation Tax, employers PAYE/NI (so you can pay yourself!), director’s Self Assessment Income Tax and VAT if applicable. Companies House formation includes filing of Directors details, Shareholder Capital and Ordinary Share Issue. Supplying Certificate of Incorporation, Memorandum & Articles of Association plus the Minutes of the First Board Meeting and Shareholders Certificates. We will also provide an introduction to your local Business Bank who can setup your Limited Company bank account.
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