many building sub-contracts are only open to companies, and some customers feel more comfortable dealing with companies. Selling the business as a company is easier, as will handing over the business to heirs.
Although the advantages of operating a business through a company may appear attractive, they do come at a cost.
1. Professional help will be required to ensure that the potential advantages are fully exploited, and the additional work will attract a cost in higher fees than if the business was operated as a sole trader. Help will be required in ensuring that the company fully meets its legal obligations set out in the Companies Law, and that the obligations of the director and company secretary are met. As well as the shareholders' tax return, an annual company tax return for the company will also have to be completed. Formal annual accounts of the company will also need to be produced, and they are subject to more complex accounting rules than a sole trader’s accounts. Although the extra work, and greater level of accountant’s advice, will mean a higher fee, this should be viewed in the context of the added value received, and for smaller companies the fee increase may be relatively modest.
2. There will also be an increase in administrative
tasks in running the company. As well as the existing requirement to submit ITIS, Social Security and Manpower returns, the company must submit an annual return early each year to the Companies Registry together with a fee of £200. Many of these tasks now have to be done online and this trend will no doubt increase in the future.
tasks in running the co A ll h
3. The creation of the company will also mean some immediate changes are required. It will need to be registered with Income Tax and Social Security and will need to obtain its own business license from the Population Office. Insurance will be required in the company name, and a company business bank account set up. All this takes up time, and in some cases may not be easy.
So, whilst the advantages of operating as a company will always continue, most of the disadvantages come in the early days, and once these hurdles have been overcome with help of your accountant, you will soon realise that you made the right decision.
Feel all alone with your tax problems?
Is your Tax too complicated to handle? Do you Need help getting through the maze?
We guide you with a personal, professional service at a cost you can afford! Call Malcolm anytime to arrange a ‘free meeting’ to discuss your needs.
Accountancy and Tax Specialists
Director : Malcolm Chambers BA Cpfa Address: 4 Bagatelle Farm Close, St Saviour, Jersey. JE2 7SJ Tel: 01534 870023 mobile: 07797 750375
email:
malcolm@chambersaccounting.co.uk www.chambersaccountinglimited.co.uk
Meetings can be arranged in the evening or at weekends as client convenience is always a key principle.
20/20 Our Money Page 19
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