When establishing a business, entrepreneurs and owners are often faced with a number of difficult decisions – one of which is likely to be whether or not to incorporate.
Businesses that choose to do so will be issued with a certificate of incorporation – an official document issued to a company registered with Companies House, which confirms that it has been incorporated under the Companies Act 2006 as a legal entity with its own identity.
This can enable the business and its owners to enjoy a number of significant benefits, but specialist advice is crucial, as incorporation will not always be for everyone and the transition will require an appropriate level of planning.
What are the benefits of incorporation?
Incorporated businesses can enjoy a number of advantages not offered to sole traders and partnerships, which include:
- Improved credibility
- Preferential tax treatment on owner’s income
- The ability to raise capital via shares
- Creation of a separate legal entity
However, this is not to say that incorporation is not without its disadvantages – which is why businesses owners should carefully consider the pros and cons before making any rash decisions.
For example, businesses will need to make a number of important changes as part of the incorporation process and may also face some fresh tax challenges that need to be overcome.
Management reshuffle and new shareholders?
If you are planning a management reshuffle, you may face challenges. Under these circumstances, you will need to re-assess directors’ duties, how these will continue and how they might need to change or be incorporated into new roles.
You may also need to re-draft contracts, shareholders agreements, partnership agreements and other vital documents as part of the process.
How can M J Bushell help?
Our expert team has spent many years assisting businesses who want to incorporate, and helping firms with reporting their information annually to Companies House, as is required under existing rules.
If you are considering incorporation, we strongly suggest you seek professional advice from someone with the experience and know-how to walk you through the process.
To find out how our team can help, please get in touch.