Why go Limited?
We have all heard about IT contractors and consultants working through a limited company but so many more people could be saving themsleves a lot of tax also, just working this way.
And as we get asked this question all the time, we've compiled a helpful list below:
1. If you are earning more than £43,000 a year then financially working through a limited company means your will pay less tax. Because the corporation tax rate is currently 20% and will fall 1% each year by 2020 dropping down to 17%, far lower than the basic 20% personal tax rate and much lower than the 40% higher rate due after £43,000.
2. A limited company means you have limited liablility and are legally seperate from your company and safer from any legal issues that may arise in the future.
3. It sounds much more professional if you are limited company to prospective clients and adds much needed credibility when working in most industry sectors.
4. You can sell shares in your company to investors and raise funding if required by approaching lenders for finance.
5. Protecting your business and brand name, a limited company registered at Companies House UK gives you the legal right to prevent the same name being used by any other business.
6. Pensions can be paid as an expense from your limited company. A big tax advantage over a self employed / sole trader business.
7. Selling a limited company, when you want to retire or move on, is far easier because it has physical presence and usually worth much more than a sole trader business.
By Anni Khan at Tax Affinity Accountants
Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice.
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