CHECKLIST
Going Limited Checklist
About forty minutes, and the first ten decide whether the other thirty are worth doing. Incorporating is a real decision with real ongoing costs, so this list puts the arithmetic before the paperwork and lets you find out which one you actually have.
- Five sections, twenty one checks, forty minutes
- The comparison run on current dividend rates, not the ones you remember
- What the company owes, and what changes for you personally
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Who this checklist is for
Sole traders and freelancers being told they should incorporate, who want to see the arithmetic on 2026/27 rates before they spend anything, and the full list of obligations if the answer turns out to be yes.
Someone told you a company saves tax above fifty thousand
That advice was built on dividend rates of 8.75 and 33.75 per cent. They are now 10.75, 35.75 and 39.35, and the arithmetic moved with them. The rule of thumb outlived the tax system it was calculated in, and it is still repeated by people who have not rerun it.
You need every penny you earn to live on
Then the second layer of tax arrives and the advantage does not. A company only wins on retained profit, because leaving money in the company is the only way to defer the dividend tax. If you are drawing everything, you are paying corporation tax and dividend tax to end up behind a sole trader.
A client will not engage a sole trader
Now you have a real reason, and the list becomes useful rather than academic. Same for limited liability, for bringing in a co-owner, or for retaining profit against a lean year. Those are good reasons to incorporate. Saving tax on money you are about to spend is not one of them.
FACTS
What the arithmetic says on 2026/27 rates
Drawing everything, the sole trader keeps more at almost every profit between £20,000 and £200,000. There is one exception: a window about £350 wide around £60,300, where the company comes out ahead by roughly £15 a year. That is less than the cost of one extra filing. Either side of it the sole trader wins, by about £4,100 at £100,000 and about £10,100 at £200,000.
21 checks
Five sections
40 minutes
Ten of them on the sum
FACTS
The company’s money stops being yours
This is the part sole traders find hardest. A dividend paid when there is no distributable profit is unlawful, however normal it felt at the time, and each one needs a minute and a voucher to be a dividend at all. Leave the director’s loan account overdrawn nine months and a day after the year end and the company pays a tax charge on the balance.