Are you unsure if you need to form an official business structure for your company?
Choosing your business structure might be one of the most important decisions that you will face. Incorporation protects your personal assets, enables you to access tax advantages and grow business.
Below are 5 top reasons to incorporate your business in Northern Ireland.
1. Corporate Tax
The Corporation Tax (Northern Ireland) Act 2015 gave power to the Northern Ireland Assembly to vary the corporation tax rate in Northern Ireland.
By way of the Stormont Agreement and Implementation Plan the Northern Ireland Executive made a commitment to introduce a new corporate tax regime at a corporate tax rate of 12.5% from April 2018.
Considering income tax rates applicable to sole traders, the new lower corporation tax will be a significant incentive for incorporating your business.
Aside from potential tax savings, there are several other benefits which incorporation as a private limited company may offer.
2. Limited Liability
The Landmark case of Saloman v A Saloman & Co Ltd  AC 22 solidified the doctrine that a company is a separate legal entity and it confirmed the principle that shareholders are not personally liable for the outstanding debts of the company.
It is uncommon for the court to lift or pierce the ‘corporate veil’ which protects the shareholders, unless fraudulent or illegal business conduct has been undertaken by the company and its agents. Limited liability is the most recognisable benefit of incorporation.
3. Protection of Name
Although there are rules surrounding the naming of a company, such as the requirement to gain special authority to use certain words, once approved by the Registrar of Companies the company name is protected.
It is awarded unlimited existence within its capacity and other companies will be unable to use the same name.
4. Transfer of Ownership
The ownership of a company may be shared by several persons and transferring ownership of a company can be relatively simple compared transferring ownership in other business forms.
5. Raising Capital
It may be easier for a company to raise capital than for a sole trader to do so. The compliance and reporting requirements which a company must adhere to may make the business of a company more attractive to some lenders compared to that of a sole trader.
In addition, a company can raise capital by selling shares to investors. Investors may be more willing to invest in a company as they know that their personal assets will be protected by the corporate veil.
Although there are obvious benefits to incorporating your business, it is important to consider the legal and compliance obligations and the various overhead costs and taxes which could arise due to incorporation.
Incorporating your business is a major decision which should be well planned and for which advice should be sought from professionals.