When it comes to launching a firm, the majority of entrepreneurs must choose between becoming a sole trader or forming a limited company. So, which one do you pick? This guide will help you understand the distinctions.
Sole trader
If you start a business of your own and don't set up a limited company at Companies House to run it from, you're a sole trader by definition. Limited company
A limited company is a type of corporation in which the owners (usually shareholders) and management are legally separated (formally called directors). It must be registered with Companies House in the United Kingdom. With a special business identification number, it gains the distinction of being a different “legal person” from the individuals who operate it.
WHICH OPTION IS RIGHT FOR ME?
It depends on your business strategy and where you are in the process. Let's take a look at two separate situations. You've recently started designing your own clothes and handicrafts in your spare time and selling them at markets and on Etsy. You have a low vacancy rate and another task. In this case, registering as a sole trader will be the most advantageous choice. It's more convenient, cheaper, and tax-friendly. Being a sole trader can be a decent way to get started if you're only starting out; you can still file as a limited company later.
For more information, or to join up, please call 0800 644 1258 or email info@accotax.co.uk or visit our Accotax website.
