I went to Blackpool yesterday – and didn’t go anywhere near the beach! One of my accountant introducers wanted me to sit in on a meeting with one of his dentist clients who was considering incorporating his practice into a limited company, as his current level of profit was taking him very close to the 50% rate band.
I had prepared a spreadsheet which showed the potential tax savings based on different levels of profit and had also reviewed the legal position for dentists, based on the British Dental Association advice sheet B6.
We firstly discussed the option of setting up a Limited Liability Partnership (LLP) but this was felt not to go far enough in mitigating his income tax liability. Once he had seen the potential savings that were available, he was convinced to form a limited company.
We then discussed which incorporation route to go down, the tricky subject of “Goodwill” and the impact on his employees.
Our final discussion centred upon profit extraction via remuneration and dividends and the matters that came out of the “Arctic Systems” case.
An hour later and we had covered all of the important areas involved in incorporation of his practice and a happy client and his advisor were left to choose a name for the new venture.