Limited Company v Sole Trader
Should you jump in a set up a limited company or hang back and try a sole trade?
It can be a confusing decision to make yourself - so let us help you decide.
Whether to be a limited company or sole trader is always a hot topic and there is not a straightforward, right or wrong answer.
What I want to do is present you with a balanced approach to help you decide which might work best in your particular circumstances so you can make the decision on the best option for you and your business.
Perhaps you are already running a business as one or the other and are not sure if you are using the right vehicle for your business, or perhaps you are starting a new business - either way, this video will take you through the advantage and help you decide.
In the above video I talk through 8 advantages of being a sole trader, and 8 advantages of being a limited company, to help you decide which you should choose.
Both limited company set ups and sole traders have multiple advantages and it can make sense in some instances to start as a sole trader then later transition to running a limited company. You are best to do that with the help of a qualified accountant to make sure that is's done without tax issues.
There is more information here about setting up as a sole trader: https://www.gov.uk/set-up-sole-trader
How to seat up a company with Companies House: https://www.gov.uk/limited-company-formation/register-your-company
You might also decide that you want to start as a sole trader and register a limited company to protect the name for the future, but not use the limited company right away. This can also be done - it would involve making the company dormant.
A dormant company is one that has no significant transactions during its financial year - significant transactions do not include filings fees paid to CH, penalties for late filing of accounts, money paid for shares when the company was incorporated - but includes everything else.
If you are testing a concept or idea or just dipping your toes in the water to see if this business owner thing is for you - then sole trader is probably the best starting point.
Make sure you consider all the advantages of each option to ensure that you are choosing the best for you.