If you are a small business owner you may be debating if it is better to pay taxes as a self-employed individual, or if you should go ahead and create a business title and pay taxes as a registered business. There are advantages and disadvantages to both, but here is a brief overview to help make the decision a little easier.
First of all, when you pay income tax as a self-employed individual then you must pay taxes on all of the income that you made throughout the year. If your business generates a lower income once you deduct all of your business expenses then this may be a good thing. On the other hand, if you generate a great deal of income this may not be the way to go.
This is due to the fact that when you pay as a business you only have to pay what you actually write off to yourself in your accounts as income. You will have to pay income tax and the national insurance on the income that you designate for yourself, but then on the rest you will only have to pay corporate tax on the profits. Therefore, if you write yourself a minimal salary and you do not make a significant profit this may be the better approach so that you are not paying taxes on the full amount.
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