Moving to a company: the right questions before you take the step
Incorporating is not only a tax question. Four questions to ask yourself before deciding.
“From what level of profit should I incorporate?” We hear the question every week. There is no magic threshold, but four questions bring clarity.
How much do you need to live on?
A company is only advantageous if you can leave part of the profit in it. If you take everything out, the tax saving evaporates.
What risk does your private wealth run?
A company limits your liability to your contribution, except in cases of mismanagement. For an exposed activity, that is sometimes the deciding argument.
Are you ready for more formalities?
Double-entry bookkeeping, annual accounts, a general meeting: expect higher running costs than as a sole trader.
What is your horizon?
Investments to finance, a partner to bring in, a business to sell one day: a company makes all of that easier.
A costed three-year simulation based on your real figures remains the best decision tool.