Sole Trader vs a Limited Company

What’s the Benefit of Limited Company (LTD)

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• Protection of your assets, it’s the company that is liable for a separate legal entity. 

• Ability to manage your money over tax years; you are taxed when you take it out, not when the company makes it. A Sole trader is a tax on whatever they make in that tax year.

 

The benefit of Sole Trader

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• Simple and fast to set up, you start trading and tell HMRC

• It’s just you

• Accounting requirements simpler 

 

Disadvantages of a Sole Trader

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• Qu dose, a lot of customers prefer to deal with Limited Company

• Your Assets are at risk if something goes wrong (Your house)

• You have no control over your tax bill, you pay tax in the year you earnt the money

• Taxed under PAYE, not Dividends, so cost you more

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When to become a Limited Company

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• There is no firm rule, just advice;

• when you reach the VAT threshold

• When you make more than £25k profit

• When you start to employ people

• When you need the Qu dose to get net customers