Posted on 14th November 2018
Is your yearly profit over £35,000? If so, changing your status from sole trader to limited company might be a smart business decision for you.
For people who have been self-employed for some time, limited company incorporation may seem like a daunting idea. But there are lots of tax benefits to setting up your own company.
Firstly, you will be in charge of your own salary and can decide how much to pay yourself each month. You could pay yourself a small salary and withdraw dividends to make up your income.
The tax charged on dividends starts from 7.5%. The first £2,000 is tax-free – yes, you read that correctly! Dividends are taken from the profit of the business.
Any profit generated from the limited company is taxed at 19%, but there’s good news on that front too. In April 2020, this rate is being reduced to 17%.
By setting up a limited company, your business’s financial affairs will become officially separate from your personal ones.
Also, you get to choose your own company name, so you can be as creative as you like in developing a public image for your business.
Even with the benefits listed above, we understand that formally changing your tax status can feel like a big decision – that’s because it is. However, at JNR Accounting we offer a full limited company incorporation service to take care of the transition from start to finish, giving you peace of mind that your tax affairs are in perfect order.
Why not get in touch with our friendly, professional team today and find out how easy incorporation can be?