Sole Trader vs Limited Company
Choosing the right business structure is one of the first decisions you will make. This table compares the two most common options in the UK.
| Feature | Sole Trader | Limited Company |
|---|---|---|
| Personal liability | Unlimited — you are personally liable for debts | Limited to investment — personal assets protected |
| Setup cost | Free (register with HMRC) | £12 online via Companies House |
| Tax | Income Tax + Class 2/4 NI | Corporation Tax (25%) + personal tax on dividends/salary |
| Annual accounts | Self Assessment tax return | Annual accounts + confirmation statement to Companies House |
| Public information | Name only | Directors, registered office, accounts on public register |
| Admin burden | Low | Higher — statutory duties, filings, potential audit |
| Credibility | Adequate for many small businesses | Often preferred by larger clients and investors |
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