Starting out - why a company?

A business can be set up in several different forms, sole trader, partnership, limited liability partnership or company. The issue of whether or not to incorporate is driven by many different factors of which tax is only one. In general terms, running a business as a company can be beneficial for capital taxes planning because:

• different rights can be given to different types of share, which may make planning more flexible
• many more combinations of ownership are possible
• shares can allow someone an interest in the ownership of the company without them having direct involvement in the management of the business
• shares more easily facilitate the use of trusts.