Incorporate your business and save tax

If you are starting a new business – or own a small business – you should consider incorporating the business (setting up a limited company) to take advantage of a favourable
tax situation.

Owners of limited companies can pay themselves dividends from the profits of the company and so save paying national insurance.

The structure of a limited company also provides the opportunity to include other people (particularly family members) as shareholders, allowing them to benefit from dividend payments in addition to perhaps receiving a small salary (and utilising personal allowances that might otherwise be wasted).

Corporation tax starts is 18% and is likely to reduce further in future years so is very attractive for higher rate tax payers; amongst other benefits the ‘limited’ structure allows
you to ring fence the profits from their higher rates and choose when to distribute them, or to have them available for reinvestment in the business without having suffered tax at
higher rates and national insurance contributions.

The cost of incorporation is £75 and is very quick; the savings can be available to any business making profits where drawings, by whatever form, are subject to national insurance contributions; the benefits vary with turnover and profit and so should be reviewed properly before making a final decision.

 

PLEASE NOTE
This is a general guide, and is not intended and does not replace specific advice taking account of your personal circumstances.

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A Smith Accounting Ltd is a member firm of The Institute of Chartered Accountants in England and Wales.

Statutory Sick Pay

Statutory Sick Pay (SSP) is currently £89.35 per weekend is payable to employees who are too ill to work, and is payable for up to 28 weeks.

Your employees need to qualify for SSP and be off work sick for 4 or more days in a row.

The payment can’t be less than the statutory amount, but you can choose to pay your employees more if you operate an ‘occupational scheme’.

More Information
https://www.gov.uk/statutory-sick-pay

Disclaimer
A Smith Accounting Limited accepts no liability for reliance on the information above.  This information is provided for general information.