A Practical Guide for Business Owners from Hammond & Co
Choosing the right structure for your business isn’t just ticking a box—it’s a strategic decision that can affect your tax bill, personal liability, and future exit options.
At Hammond & Co, we help business owners see the big picture, not just the numbers, so you can make decisions with confidence.
Why Business Structure Matters
Whether you’re just starting out or considering a change, your legal structure—sole trader, partnership, or limited company—has real implications:
Structure |
Key Features |
Sole Trader / Partnership |
Simple setup, fewer filing obligations, but taxed on all profits—even if you reinvest them. |
Limited Company |
Offers tax planning flexibility, limited liability, and credibility with investors or suppliers—but comes with extra responsibilities and planning requirements. |
Key Questions to Ask Yourself
Before making a decision, consider:
- What are my long-term business goals?
- Do I need regular access to all profits?
- Will incorporation limit or enhance flexibility?
- Are there strategic or commercial reasons to incorporate?
- What are the tax implications under each structure?
- Am I planning to exit or sell the business in the future?
These questions define how your business grows and how you’re rewarded for the risk you take.
Thinking Ahead: Planning for an Exit
Even if selling feels far off, planning early could save you thousands later.
One key consideration is Business Asset Disposal Relief (formerly Entrepreneur’s Relief). If you qualify, you may pay just 10% tax on up to £1 million of lifetime gains—but only if your business is structured correctly well before the sale.
Extracting Funds: Know the Difference
Structure |
How Profits Are Handled |
Sole Trader / Partnership |
Taxed directly on all profits |
Limited Company |
Funds extracted via a mix of salary, dividends, interest, or pension—requires strategic planning |
With the right advice, a limited company can provide tax-efficient extraction and long-term financial flexibility. Without guidance, it can become costly and complex.
How Hammond & Co Helps
We don’t just crunch numbers—we ask the right questions. When you work with Hammond & Co, you get:
✅ Personalised guidance – tailored to your business and lifestyle
✅ Clear tax comparisons – for today and the years ahead
✅ Exit and remuneration planning – so you’re never caught off guard
✅ Ongoing support – as your business and tax laws evolve
We’re your friendly face of accounting—no jargon, no pressure, just practical, actionable advice.
Ready to Make a Confident Choice?
If you’re unsure whether to stay as you are or take the incorporation step, speak to Hammond & Co today. We’ll help you understand the implications, plan strategically, and make the choice that’s right for you and your business.