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WHY INCORPORATING CAN MEAN AMAZING TAX SAVINGS
By Demetris Savva BA FCCA

According to a new survey carried out by Alliance & Leicester, one in five small business owners view tax as their greatest concern. The Chancellor has announced in his last budget that companies with profits below $10,000 will not have to pay any corporation tax with effect from 1 April 2002. The question to be asked is: does that announcement make incorporation a more attractive option compared to being a sole trader?

The answer is that from a tax point of view, it is advantageous to trade through a limited company as long as the income is drawn from the company by the owners as dividends from their shares and the amount of dividends drawn is restricted below the 40% band...
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