I would like to start a farm. Do I need to register it as a company?

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My father and I have left employment at a large farming corporation, and are hoping to re-establish ourselves as an independent farm. We know a lot about crops, but not much about companies. Is there a particular company structure we should be thinking about?

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There is no requirement to set up a company to run a farm - you could simply operate as a sole trader. To do this, you would need to register with HMRC for Self-Assessment. You would be classed as self-employed and would pay Income Tax and National Insurance on the profit you make. However, as a sole trader, you would be personally liable for all business debts.

If you operate your farming business as a limited company, you would enjoy the financial protection of limited liability. This means you would only be personally responsible for business debts up to the amount you invest in shares or guarantee to pay in the event of insolvency.

A limited company structure would also be more tax-efficient because you would only have to pay 20% Corporation Tax on the profit you make - Income Tax can be as high as 45%. Furthermore, you could potentially minimise your own personal tax by paying yourself a salary and dividends through a company.

a year ago
 

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