DEDICATED GUIDE
Sole Trader Vs Limited Company
This guide aims to answer the question, “Should I operate as a Sole Trader or via a Limited Company?” which is very frequently asked by people starting off in business for the first time, let’s consider these two structures in a lot more detail. Complete the form at the bottom of the page to download this guide.
Introduction:
Often, the term “self-employed” is used interchangeably with regard to these two structures, and while in some respects this is true, there are some fundamental differences between them and how they operate.
Strictly speaking, only a worker who operates as either a sole trader or a partnership is “self-employed”, and what this effectively means is that this worker is subject to tax him or herself via the self-assessment system on the profits of the business.
In contrast, while the limited company itself is “in business” (as a separate legal entity), the staff and directors of the company are actually all “employees and employed” by the limited company, although some of them can also be business owners by virtue of being shareholders.
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