Sole Trader or Ltd?
The question of limited company vs sole trader is always a hot topic, and there is no straightforward answer; a lot of videos on this topic present a very skewed view towards one or the other. We want to provide you with a balanced look at limited company vs sole trader. We even have a free decision making aide that can assist you in deciding if your business is best starting out as a limited company, or a sole trader.
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Making An Informed Decision
There are definitely arguments to be made for either option and you should definitely consider each option for your business. Running your business through a limited company for example can help you avoid issues with suppliers/contractors who will only deal with limited companies. In addition, a limited company carries the value of limited liability, a key benefit of this legal structure that makes it very attractive indeed. It’s worth noting that you can incorporate your sole trader business into a limited company at any point. From a tax efficiency point of view, when your business reaches a stage where profits are around the £20,000 mark and above, then incorporating your sole trader business into a Limited Company will start to yield measurable tax benefits. Our advice would be to consider this as, when the time comes for you to incorporate, you know that your business is viable and you already have cash flow. However, we strongly advise you consult a professional accounting service before you attempt incorporation from your sole trader structure into a limited company, as there are complexities that need to be considered and the costs of getting it wrong far exceed the professional fees you would incur. If you’re not sure where to start when it comes to incorporating your sole trader business, why not get in touch with us? We have years of experience in this field and would love to help you.
Free Decision Tool
As well as our video explaining the considerations between for & against each vehicle we’ve prepared a free decision tool document for you to download. By following the steps in the document, you’ll be able to find out if operating as limited company could be beneficial for your business, or if it might be in your best interest to remain as a sole trader for the time being.