Starting your own business can come with its fair share of challenges. You will also probably learn a lot as you go along and this is completely normal. One of the first things that you need to work out is if you need to start a company as a sole trader or whether you want to become a limited company. When you are able to work out this information, you can then go and plan out the other aspects of your business with ease.
Sole Trader VS Limited Company
A sole trader is someone who is self-employed, but also someone who is the sole owner of a business. It is the most simple business structure out there and this is one of the many reasons why it is so popular. You can set one up with ease and it is all very easy to understand. A limited company on the other hand is a business structure that has its own legal identity. It is completely separate from the person who is running the business and even the directors are not classed as being part of the identity. Setting up each structure will come with its own fair share of advantages and disadvantages, so take a look below to find out more.
Sole Trader Advantages
When starting your own company, it is a good idea for you to look into things like dividend allowance. Companies such as Afhwm.co.uk are great at this, so check them out today. The main benefits that you get when you start a sole trader business are that it is very easy to setup and you won’t have much paperwork either. You will have to complete an annual self-assessment return and you have much more privacy when compared. The problem with this is that you will have to accept liability for your business.
Limited Company Advantages
When you start a limited company, your assets won’t be exposed if something should go wrong. When you look at the whole thing from a broader perspective, you will soon see that limited companies are much more tax efficient when compared. You will make more profit and nobody out there can use the name when you have it. Sole traders are not offered this kind of protection so it just goes to show how different the two types are. As a limited company, you also have the ability to hire team members or even people to operate your company. When you do this, you know that they will then have the same benefits that you have in terms of the company and liability, so this is another huge benefit that comes with running a limited liability business.
So there are so many differences between running a limited liability company and operating as a sole trader. When you are able to understand the difference between the two, you can then begin to make the most out of the company you have chosen and you can even start to plan out the goals that you have as well so there really are no limits.