There are many reasons why individuals in self employment or partnerships choose to incorporate their business but one cannot fail to notice the financial saving presented by incorporation.

Provided an individual is not caught by IR35 or other complex legislation then taking a low wage with dividends can result in an annual saving of £4,210 in the tax year 2011/12.

The table below illustrates how an income of £46,902 achieves a saving of £4,210 in three stages. Where there is scope to defer or reallocate income the annual financial saving can exceed this amount.

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There is always considerable discussion on the merit of paying dividends or bonuses in family or sole proprietor owned director/shareholder companies.

Typically, articles highlight the factors to be considered and the risks but then poorly illustrate the tax savings. So, I have done just the opposite.

I have taken just one scenario, illustrating the £695 saving available on a £10,000 bonus or dividend payment to a higher rate tax payer (basic rate tax payers save £1,783).

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It is a fact that government policy is forcing businesses to provide an ever increasing list of information online but to combat the disproportionate impact on small businesses, free software is occasionally made available to help.

As I pointed out in More electronic filing, anyone? employers with fewer than 50 employees will have to file their 2009/10 PAYE ‘end of year’ forms P14 and P35 online. While in the following year most ‘in year’ forms must to be filed online as well.

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