Incorporation of a business can in many cases prove far more cost-effective in terms of tax and National Insurance than remaining self-employed. Whilst the additional administration costs must be taken into account, the net tax savings can reach up to £2,500 per annum if healthy levels of profits are being made. In addition, a company can act as a taxation shelter, where the capital of the business is being built up which can create further substantial savings.
On the commercial side, a limited company can also provide protection from risk for the owners if matters are properly structured and also the share capital gives excellent opportunities to offer a stake in the enterprise to family, employees, business associates, etc.
Despite the attractions of companies, full professional advice is always needed as pitfalls and disadvantages can arise, such as the following:-
a) Adverse impact on customers or suppliers.
b) Longer term disadvantages in terms of the capital taxes.
c) A change in the balance of the equity amongst partners.
d) Effects on pension arrangements and benefits.
There are many other factors to consider before taking such an important decision, but as many of the obstacles can be easily overcome, it is certainly worthwhile sole traders and partnerships carrying out a review of the position. If this article affects you, please contact us on 01626 200124 so that we can arrange a calculation of the taxation effects and then report to you on the pros and cons as far as your personal circumstances are concerned.
THE HIDDEN COSTS OF CAR BENEFITS
Car benefits are determined by reference to the cars carbon dioxide (C02) emissions and the list price of the car when new (including any extras) and this can create high tax charges even though the use may be predominantly for business purposes.
With our advanced computer software we can prepare the detailed taxation calculations required to determine the cost effectiveness of the provision of cars to directors/employees in the future and would be pleased to review the position for your business. If this is a matter which you feel that you should be considering then please contact us and we will supply a simple questionnaire to obtain the required information for processing to enable a report to be prepared for you.
Please contact either Mark Adams or Paul Green at this office if we can be of assistance to you on this matter.
DON'T PAY A PREMIUM; ON YOUR LIFE POLICIES
Over the years we all tend to accumulate various life assurance, savings or retirement schemes and it is useful from time to time to review whether these are meeting our requirements or whether the cost of these can be cut. Over recent years the life assurance market has become much more competitive and the result is that a policy taken out some years ago maybe relatively expensive and more cost effective policies could be available to cover the following:-
Permanent Health Insurance
Family Income Plans
Key Man Cover
As a result we have established a link with independent financial advisers and following the completion of a fairly basic questionnaire they can provide a free cost comparison. If you are interested in this service please let us know and we will send you the appropriate questionnaire. Incidentally at this stage your name would not be disclosed and the exercise would purely be a cost comparison (assuming acceptance on normal health terms).
Similarly if you hold Unit Trusts/PEPs/ISA/Investment Bonds our broker can provide a review of the performance for the product you hold and a comparison to the sector. If this is of interest kindly contact us.