Should I incorporate? This is a question businesses across the West Midlands frequently ask our specialist tax advisers, especially given the reductions in corporation tax.

While individuals who are self-employed are liable for income tax on profits as they arise, companies are a separate legal entity and it is the company which pays the tax on its profits. 

Indeed, the corporation tax rate for small companies with profits below £300,000 now stands at 20 percent, while larger companies can benefit from a reduced rate of 24 percent. For the latter, the rate of corporation will be 23 percent from 1st April 2013. 

Additionally, a company structure provides flexibility in deferring profits to another tax year if the business does particularly well, an option that is not available for sole traders.

The incorporation of a sole trader can generally be achieved without immediate tax charges. However, it is important to seek professional advice before taking any steps to incorporate, and our specialist tax advisors in Sutton Coldfield can help.

We can also provide dedicated advice for LLPs across Birmingham and the greater West Midlands, to help them make the most of their new structure.

For more information on the services provided by our tax advisers and accountants for LLPs in Sutton Coldfield, please contact us.