Sole Trader vs Limited Company: Which Is Right for You?

As a sole trader, you and your business are legally the same. That means simpler admin, but unlimited personal liability and Income Tax on all profits via Self Assessment.

A limited company is a separate legal entity. You'll pay Corporation Tax on profits and can pay yourself via salary and dividends, often more tax-efficient at higher profit levels, but with more filing obligations (CT600, annual accounts, Confirmation Statement).

There's no universally right answer. It depends on your profit level, risk tolerance and growth plans. Many sole traders incorporate once profits pass roughly £30,000 to £40,000 a year.