Should I trade through a shelf company?
If you are a small supplier of goods, you may be wondering whether would be better to trade through a company. The answer is usually “Yes”.
The first question I ask is “Are you providing a service or supplying goods?”
If you are supplying goods, then the answer is usually yes, rather trade through a company. Why?
1) Your customers will probably respect a company more than a sole trader.
2) Companies are taxed at 28%, individuals at from zero to 45%. You can balance your salary in such a way that the total tax is minimised.
3) The company may well qualify as a Small Business Corporation (SBC) which has very significant tax advantages.
4) The company can be owned by a trust, which has significant advantages as it grows in value, although it won’t qualify as a SBC in this case.
5) The allowable tax deductions are clearer for companies as your personal affairs will not be included in the company tax return, whereas a sole trader submits one tax return only which includes their personal affairs and those of the business.