Why Pay More Tax Than You Need To?
Every business owner wants to make their money go further and reduce tax liability. One way to do this is to take advantage of the tax-saving opportunities you can get by becoming a limited company.
Why Become a Limited Company for Tax Efficiency?
- A limited company is generally strongly favoured by the taxation regulations. It is subject to tax, but its profits are not normally subjected to higher rates of tax - unlike income tax.
- Directors do pay tax, but they are entitled to claim all the usual personal allowances against their income.
- As a sole trader, the profits of a partnership are divided for tax purposes amongst the partners and they are assessed personally to tax on these amounts, even if they have not actually drawn any cash out of the business. This is not the case for a limited company.
Alongside potential tax savings, there’s also: limited liability, greater borrowing power, improved reputation and credibility – this sounds good to us!
Are You Getting the Best Advice?
With good tax planning, including the implementation of a company pension fund, it is possible for your accountant to allay a considerable amount of tax. In most cases, they can negate all corporation tax completely!
Whilst a good accountant can help you in the reduction of your tax, they should also be able to assist in demolishing the old myth that the administration of a limited company costs more than any other form of business. If your accountant says that administering your limited company will cost more than you could otherwise save, perhaps you should investigate a new accountant.
We would advise you consult Paramount, whether that be for advice, guidance or support. Take a look at our company formation packages, call 0800 0198 698 to speak to our professional team or contact us online.