Incorporation

Incorporating a business, converting it from a sole trade or partnership into a limited company, can bring benefits including different tax treatment, limited liability protection, and a more formal structure that some clients and lenders prefer. However, it also brings new compliance obligations and costs.

The transfer of assets, goodwill and contracts into the new company needs careful handling to avoid unexpected tax charges, and the ongoing tax position for the owner as a director and shareholder will differ from that of a sole trader. A full review before incorporating helps ensure it is the right move at the right time.