Sole trader Partnership LLP Limited company
Easy and straightforward Pick a name, issued share capital and directors Online Cost approximately £20 Certificate of incorporation issued within two days
Separate legal entity Responsible for: Filing annual return Annual accounts Accounting for corporation tax to HMRC Limited liability Personal guarantee
Registration Account for quarterly On time Surcharges VAT visits
Monthly or weekly routine Responsible for the deduction of PAYE/NIC and payment to HMRC Employ a bookkeeper to administer Outsource to an accountant Should be easily affordable
Account for once a year Losses can be carried forward R&D Tax Credits Can claim a tax rebate of circa 33.35% of money spent on R&D Grants reduce claims but don’t cancel
PAYE and NI on salary drawn Dividends Annual self-assessment tax return Capital Gain on sale Entrepreneurs’ relief
Capital Gains Tax currently 20% Eligible for a tax rate of 10% if qualify for entrepreneurs’ relief Individuals qualify for a lifetime limit of £10m Must own 5% of shares Trading Company Director or Employee
EIS/SEIS relief Tax relief for unconnected investors Income tax relief of 30%/50% on their investments Exempt for Capital Gains Tax on disposal Capital loss on disposal of shares allowed against income
Unquoted Qualifying business activity Money raised must be employed within a specified period Can apply for advanced assurance
The right to buy shares at a pre agreed price given achievement of performance criteria Used to retain and motivate staff If shares are just given to staff this would result in a personal income tax charge This can be expensive and at a time when the employee might not have the funds
EMI allows options to be granted without any tax charge to the employee until the shares are sold. Shares must be market value when the options are granted. Employee cannot own more than 50% of the company. Must spend more than 25 hours per week working for the company.