When is the right time to incorporate your UK small business?
Freelancers – when is the right time to incorporate in the UK?
Are you a successful sole trader, making a reasonable profit but starting to question if sole proprietorship is still the right entity for you, your business and potentially your clients?
Having watched many businesses mosey along the shifting lifecycle of a business it’s clear to me the survival of a business depends on selecting the right business structure at the right time and a number of factors come into play.
When to incorporate?
If your business is stable with a steady pipeline of business but not attracting a broader range of clients or you are failing to pull in the bigger clients then a new business structure could be the solution for the continued growth of your business.
Why incorporate a business?
A change in business structure can further mitigate business risk, protect your personal assets and build business credibility which as I mentioned earlier leads to bigger and notably more profitable clients.
The tax savings associated with incorporating a company affect your bottom line therefore a very good reason for becoming a Limited company.
For more benefits and everything else you need to know about heading up a Limited Company read our detailed Limited Company blog
Are you ready for the extra responsibility?
If you are switching to an incorporated model you must be fully aware of and ready for taking on the added responsibility of being a Company director.
The responsibilities of Company Director include:
- Abide by Companies Act
- Provide Skill, care and due diligence to your company, employees and clients
- Act in interest of the company not yourself
- Maintain detailed record keeping &
- Provide detailed reporting
Ready to incorporate – what next?
If you have already weighed up your options and reached the conclusion setting up a Limited Company is right for you it is a straightforward process.
Incorporating a Company in UK is much easier than most countries. You must register your company name at Company House and ensure the name isn’t already taken. All you have to do is fill out a form online at Company house, provide business address, personal details as Director and £15 fee and start with a minimal capital investment of £1.
Remember your details are now in the public domain and don’t forget to tell HMRC within the 3 month registration period.
A word to the wise. Opting to switch structure at the wrong time could be the difference between success and failure!
First speak to an expert to get your timing right and avoid any costly HMRC mistakes. An expert will not only advise you but will take care of the whole registration process and fully manage the ongoing reporting and responsibility for you.
If you are freelancer looking to take your business to the next level call Simon for a free business consultation on 0141 290 0262 or get in touch via Twitter or LinkedIn.