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Sole Trader vs a Limited Company

On Cloud 9 Accounting limited Company vs Sole Trader

Limited Companies provide

  • Protection against your personal assets, e.g. your house

  • Control over your Taxes

  • Qu dose of running a company

What’s the Benefit of Limited Company (LTD)

  • 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

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

  • It’s just you

  • Accounting requirements simpler 


Disadvantages of a Sole Trader

  • 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

When to become a Limited Company

  • 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

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