Company Law Changes on the horizon
The white paper on reform to the Company Register, sets out a series of adjustments for businesses for 2023 to “safeguard our national security and reduce the economic and social costs of fraud,” the white paper laid out that small and micro businesses will potentially have to publicly file their profit and loss accounts which they are exempted from at present, having only to file a simplified balance sheet.
Most of our clients are happy with this potential change as it makes their business more transparent and easier to keep suppliers onside. Those who value their privacy however have strong objections and are considering their options before the reforms kick in.
The only real option available is to disincorporate, which means transferring the business assets to one or more individuals as a Sole Trader or a Partnership. In that way, public filing of accounts is not required. This is a big step and not many will want to do it.
While disincorporation might preserve privacy, it also brings significant changes and potential drawbacks. Sole traders and partnerships face unlimited liability, meaning personal assets could be at risk if the business incurs debt. Additionally, they may lose out on some tax benefits and protections available to incorporated companies.
Therefore, businesses must weigh the benefits of privacy against these risks and the advantages of incorporation, such as limited liability and potentially more favorable tax treatment. It’s essential to seek professional advice to understand the full implications and make an informed decision.
We recommend discussing these changes to company law with your accountant or legal advisor. This will help to determine the best course of action for your business. Keeping abreast of these developments will help ensure that your business remains compliant and well-prepared for the future.