Should I set up my business as a Sole Trader or a Limited Company? (Pros & Cons)
Are you thinking about starting your business but are unsure about whether to set up as a Sole Trader or a Limited Company?
In this short video Debbie Gallacher, Accounts Manager here at Henderson Loggie, shares with you some of the advantages and disadvantages of both of these options.
Covered in this video:
✅ Sole Trader Advantages & Disadvantages
✅ Limited Company Advantages & Disadvantages
If you have any queries, or you are unsure what to do, please feel free to contact Debbie directly by email at firstname.lastname@example.org
I often meet with startup businesses who are really excited about their new venture and one question I often get asked is, “Should I set my business up as a sole trader or a limited company?” I’m not going to go through all the pros and cons and I’m not here to say which is the best option as this will depend upon your personal circumstances and how you want to run your business.
Sole Trader Advantages & Disadvantages
One of the advantages of being a sole trader is the fact that it’s easy to set up and there’s little administration. You will need to maintain your accounting records for your income and your business expenditure and any profits will be chargeable to tax under the personal tax regime. Another advantage of being a sole trader is the fact that your trading results will remain private for the year. However, a disadvantage of being a sole trader is the fact that if your business gets into debt, you will be personally liable for these debts.
Limited Company Advantages & Disadvantages
A limited company is a separate legal entity in its own right and your liability will be restricted to the amount you invest in the company’s share capital. However, there’s a lot more administration with running a limited company. Every year you will need to submit to Companies House statutory accounts in a confirmation statement. You will also need to prepare and submit to HRMC the company’s corporation tax return. It is worth noting though if you’re a small company you will only need to submit to Companies House the balance sheet and related notes. You don’t need to submit the profit and loss account which shows the trading for the year.
Any questions about setting up as a Sole Trader or a Limited Company?
So I’ve gone over a couple of the options of being a sole trader and a limited company. The option that’s best for you will depend on your personal circumstances. If you have any questions, please feel free to contact us via the form below.
The information in this video is of a general nature and seeks to highlight some of the issues which could be affecting you and/or your business, including changes to financial regulation and legislation. Viewers should not rely on this information without seeking professional advice on its application in their circumstances.