Ask any accountant and they’ll tell you the same thing: the most commonly asked question they get asked is whether it’s better to set yourself up as a sole trader or a limited company. As you might imagine, there’s no easy answer.
In fact, we’ve covered this subject a number of times before on our blog, notably in these articles:
- Sole trader or a limited company: what’s right for you?
- Being self-employed: the 5 most commonly-asked questions
However, since it’s one of the things that concerns our readers the most (and seeing as we get new readers every week – you can subscribe to our newsletter here!) we thought it might be worthwhile going the main points again, but this time in a snazzy infographic style.
So here it is, for your peace of mind: Sole trader or a limited company: what’s the difference?
Now, as beautiful as this lengthy creation is, it’s worth exploring some of this in a bit more depth. After all, these are just a few of the main points when it comes to answering the sole trader or a limited company question. Just drop us a line via our contacts page or call us on 0207 100 6011 and we’d be delighted to discuss it in detail, with your situation in mind. The key areas to discuss are as follows:
- A limited liability company is a separate legal entity to its shareholders and directors: unless there is proof of fraud or evidence of corporate manslaughter, neither shareholder or director can be held personally accountable for the company’s actions.
- A sole trader is held personal liable for his business borrowings and to any creditors if his business fails. He will also be held personally liable for any claims that are not covered by insurance (read the small print very carefully).
- Once you start employing people or expanding you may worry less if you have the benefit of separate legal liability.
- Running a business via a limited company looks more impressive: you simply look like a bigger operation.
- You can run your business in a partnership via a LLP in order to protect yourself from claims however partners may still remaining jointly liable for certain acts of the LLP and this can result in personal bankruptcy.