About Sole trader versus limited company
Compare the advantages and disadvantages of operating as a sole trader or a limited company for your small business. Learn how to register, pay tax, and choose the best structure for your needs.
You’re legally obliged to choose a suitable company name, which will need to be registered with Companies House. Your company name mustn’t it be so similar to an existing.
You’ll need to appoint a director if you’re setting up a limited company. This person will be responsible for keeping company records up-to-date, file accounts and the company ta.
If you plan to make a profit, you’ll need to issue shares. Initially this can be the director alone, who holds all of the shares. Alternatively, you could sell shares to others, an.
Aside from details of personnel such as the director, company secretary and shareholders, you’ll need to ensure other information is recorded and kept current. This includ.Choosing between a sole trader and a limited company impacts legal structure, tax, liability, and administration123.Comparison of Sole Trader and Limited CompanyAttributeSole TraderLimited CompanySourcesLegal StructureSingle individual owns and runs the businessSeparate legal entity from its owners 1 2 3Tax ImplicationsIncome tax on profits, higher personal tax ratesCorporation tax on profits, potential tax savings 2 3 4LiabilityUnlimited personal liabilityLimited liability, personal assets protected 1 2 5Administrative RequirementsMinimal paperwork, annual self-assessmentMore paperwork, annual accounts, and reports 1 2 6ControlFull control over business decisionsShared control with directors and shareholders 2 3 7The choice between a sole trader and a limited company depends on various factors, including the nature of the business, growth ambitions, and risk tolerance. Sole traders benefit from simplicity and full control, while limited companies offer limited liability and potential tax advantages123.
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