Are there any reasons that we should consider incorporation
Monday 24th of April 2017 09:00
Golf Clubs are increasingly going down the route of incorporation. There are both legal and tax consequences of incorporating an unincorporated trading business. This brief note will consider the main legal implications but will not deal with the tax position. It is vital before deciding to incorporate that you seek independent tax advice as it is likely that clearance from HMRC is required, or should be sought, prior to incorporation and which otherwise could leave you with an unexpected tax burden
From a legal perspective, the principle driver behind incorporation is usually an attempt to reduce the personal liability which may be attached to the owners of the golf club. For example if someone dies or suffers serious injury on a golf course and the golf club is at fault, then the owners could be personally liable if sued, meaning their personal assets (eg home, car, money) could be at risk
The opposite applies In the case of an incorporated entity, where the owners, as shareholders, can seek to limit their liability to the value of their shareholding. It is this ability to mitigate liability which is a major factor which persuades many Golf Clubs to go down the route of incorporation.
We would always recommend that you seek legal advice from a solicitor prior to embarking upon incorporation.