So you’re considering incorporation, but you’re not sure of the benefits? Luckily, we’ve put together a comprehensive outline of the positive effects of incorporation on your company.

For a start, if you choose to incorporate your business, then that means that you are creating an organisation which will run it for you. This company is very much its own entity, which can be very useful when thinking about finances, and especially debts, as those of the company are can be seen as separate from your own.

Another, quite well known advantage of incorporation is the tax benefits. If your company is incorporated, then you do not need to pay any national insurance or any income tax when it comes to the profits you receive. Instead, what you pay is corporation tax, which is around 20% of your profits up to £300,000. Therefore, it definitely makes sense to incorporate your business, especially from a tax perspective. However, you should remember that it will be necessary for you to pay the tax on all and any dividend payments which have been drawn from the business and paid to shareholders.

Meanwhile, choosing to incorporate your business can help to reduce your liability, as shareholders and directors of the company will only have to be liable for any outstanding debts of their purchased shares. Directors’ personal assets are therefore not at risk if the business is having trouble with debt – the only way this could happen is if they have loaned money to the company themselves and the company is unable to pay back. Having said that, individuals who knowingly endeavour to lend money to companies which cannot afford to pay back can have legal action and charges of fraudulent trading levied against them. What’s more, more and more banks are refusing to provide funding unless there are guarantees included, meaning that most business loans have guaranteed security when it comes to the personal assets of directors.

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If you are a company, then you are likely to have better luck with finance providers, as providers are often more willing to deal with companies than they are with individuals – possibly relating to cash flow or because there are more ways of getting back unpaid loans. Plus, thanks to the separation of management and company, it is possible for a company to carry on operating irrespective of what it going on in the finances of shareholders, management staff and, indeed, the owners of the company.

Lastly, creating a company means that it will be necessary to keep accounts in order along with the tax returns which are filed annually. This can be a time consuming process, but overall it will make it easier to sell your business in the future, if necessary.

Overall, incorporation can save you lots of money and time, meaning that you have more time to relax and look after yourself, leading to higher productivity overall. You can chill out by playing sports, reading a good book or even by winning cash by playing on U.K. bingo site Enjoy!