Incorporating your business

Incorporation means moving your existing business into a limited company. Done at the right time, for the right reasons, it saves tax and protects you. Done by default because “everyone has a company”, it adds cost and admin for nothing.

Reasons that justify it

• Liability. The company’s debts stop being your personal debts — decisive if you carry stock, premises, staff, or contract risk.
• Tax at growing profits. Corporation tax (19%–25%) plus dividend tax on what you extract can beat income tax plus National Insurance on the whole profit — especially if you can afford to leave some profit in the company.
• Perception and access. Some contracts, agencies, and lenders simply prefer companies.
• Planning room. Company pension contributions, income timing between tax years, and bringing in a spouse or co-owner as shareholder all work more flexibly through a company.

Reasons that don’t

Hiding income doesn’t work (HMRC sees company filings), and at modest profits fully withdrawn, recent dividend tax rises have narrowed the gap — from April 2026 dividends are taxed at 10.75% (basic) and 35.75% (higher), on top of corporation tax already paid. The arithmetic needs doing with current rates, not folklore from 2015.

What the switch involves

1. Form the company and appoint directors and shareholders — decisions with tax consequences, not formalities.
2. Transfer the trade and assets. Goodwill and equipment need valuing; reliefs usually prevent an immediate capital gains bill, but only if claimed properly.
3. Close the sole-trade record cleanly: final accounts and Self Assessment covering the switch.
4. New registrations: corporation tax, PAYE for your own salary, VAT transferred or re-registered.
5. New bank account, new invoicing details, and contracts moved across.

There’s also timing: incorporating at your accounting year end is far tidier than mid-year.

Dentists, a special note

For associates, incorporation interacts with NHS superannuation and how your income is paid — the answer is genuinely individual. It’s a conversation we have with dental clients constantly; see our dentists page.

How we help

We run the numbers both ways with current rates, tell you plainly whether incorporation pays, and if it does — handle the whole switch, from formation to first company accounts.