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Sole Trader or Incorporated Limited Company – What’s best for me?

    Are you looking to set up your business for the New Year? Are you ready to take the leap to becoming self-employed? If you answered yes to either of these questions, then keep reading to learn some of the differences between being a Sole Trader or a Limited Company, so that you can make the best decision for yourself and your business.

    There are both advantages and disadvantages to each business model, therefore, we are hoping to help you choose the right one for you and your circumstances.

    Firstly, understanding the main differences between these two business types is important when it comes to choosing which is best for you. 

    As a Sole Trader you would be responsible for all assets, personal and business. Which means any expenses such as, house or car could be at risk if your business was to take a large financial blow. Alternatively, a Limited Company’s finances are a separate entity from your personal ones, so you would only be responsible for the money that has been invested into your business.

    The amount of paperwork is another key difference between these two models, being a Sole Trader comes with very few formalities compared to a Limited Company.

    Sole Trader is a simpler business model to set up, as it has a lesser amount of paperwork and obligations.

    Setting up a Limited Company is definitely more complicated and will involve a greater cost but will be able to open you and your business up to some larger opportunities; like funding and being more tax efficient.

    To summarise…

    Advantages of being a Sole Trader

    • Ability to start right away
    • Minimal paperwork
    • Full control of your business

    Advantages of being a Limited Company

    • Tax efficient
    • Funding opportunities
    • Limited liability

    Being a Sole Trader is often the best option for those who are self-employed and small business owners especially due to the ease of the set up. However, if you ever decide that you think you would do better as a Limited Company, then it is okay and most importantly, easy to make the switch.

    Reasons to switch to being a Limited Company

    • Earning more, looking to be more tax efficient 
    • Looking to bring on employees
    • Funding opportunities have presented themselves

    With our help, we can assist you in making the best decision possible when it comes to your future with your business – whether that be as a Sole Trader or as a Limited Company. 

    MoulderAS is here to support you in whatever way we can, when it comes to choosing a business model, from the set up to the everyday running and managing your new business.

    Please don’t hesitate to get in touch with any further questions you might have.