Sole Trader, or Limited Company?
The format you choose will depend on a number of factors, including how much money you expect to make, and what you want to do with it. Setting up a limited company can offer tax benefits, protect your personal assets and create a more professional impression of the company.
This is the simplest route if you are the only owner of the business. However there are certain obligations you must fulfil with HMRC, and tax obligations you must meet. As a sole trader you keep all profits after tax, but you are also personally responsible for any losses your business might make. There is no distinction between you and your business, so you bear all legal and financial responsibility.
The company can share its profit, after tax, amongst its shareholders as dividends. The director(s) are responsible for running the company and usually own shares, but are not personally responsible for any losses the business may make.
If you’re unsure which format to choose, call us today on 01737 234567 for guidance and advice.