It used to be the case that making the leap from sole trader to incorporated company was complicated, long-winded, and often not worth the hassle. For the majority of dental associates, incorporating was hidden behind a transparent pay wall: something to be reserved for those whose practice was earning the big money.

However, today it’s a process well worth considering, even if your income is more modest. While some associates may still want to run for the hills at the merest mention of ‘incorporation’, times have changed, the tax landscape has altered, and those hills can stay well in the distance.

Far from being the preserve of higher earners, incorporation can bring enormous benefits for many who are self-employed. Chief among these are the financial advantages that are on offer.

Clearly, there are big differences between your status as a sole trader and that of a company. Being self-employed is the simplest and easiest model there is: no fuss, no extra admin – but also no real reward. When you’re a sole trader, you are your business. And as the two are interchangeable, you pay tax on every penny of profit that passes through your fingers.

Becoming a company opens the door to tax reduction options and greater flexibility over how you spend your money. (In fact, the financial gains and other benefits are topics we’ve touched upon in the past). As the head of a company, you have the power to reduce your personal expenditure, reduce the dividends you take, and therefore reduce your overall tax bill. This means that (unlike a sole trader) you don’t have to pay tax on everything you earn, and can see real gains where you earn more than you actually need.

You can also unlock additional benefits, including reorganising some of your expenditure to reduce your tax – whether it’s a big-ticket item such as an electric car or something smaller like a mobile phone. And while sole traders are limited to a personal pension, company owners have increased options to choose from. Put simply, it’s an opportunity to make your professional world work for you, in a way that isn’t possible when you go it alone.

Another important point to note is financial liability. While sole traders are personally responsible for their business and its finances, making that distinction between yourself and your company provides an additional layer of protection: your business is legally a separate entity. Your personal assets don’t belong to your company, and vice versa, meaning that if your financial position ever changes, your liability is significantly reduced.

So, how do you go about it? We’re here to help sole traders make the change to company status, seamlessly and – most importantly – painlessly. We’ll work with you to set up your company and guide you through how to use it. Along the way, we’ll pair you with advisors on the finer details like pensions and insurances, and will create a personal tax strategy based on your needs.

If you’re keen to explore the idea of incorporation (or even if you’re feeling unsure), we suggest getting in touch with us for a free initial conversation. We’ll be able to tell you if incorporation is a good fit for you, and provide a guide to the benefits you’ll see from switching.

To arrange a call, get in touch.