This post defines and compares the key differences between sole traders and limited companies. To help you find out which structure best suits your business.
Sole Trader Structure
A Sole Trader also known as a sole proprietor is an individual who runs and owns the entire business. Self-employed with no partners sole traders can employ workers but are the only ones in charge of the business. As the chief of operations, this structure brings positives and negatives that can be minor or even major depending on your results. The success and failure of the business is ultimately on you. Unlimited liability enables you to keep all profits after tax but also makes you responsible for any losses.
Limited Company Structure
Limited Companies legally exist in their own right. Most small businesses are incorporated by Companies House through formation agents such as Companies999. We offer simple company registrations and perfect formation packages to assist incorporating your business today. Limited Companies hold their own legal identity separate from owners and managers. This results in the capability to own assets, borrow/lend money, make contracts and sue in its own name.
The ownership of a limited company is divided into equal parts labelled shares. This provides limited liability for the owners of the business and restrictions on ownership. The liability of the members of the company are limited to what they have invested or guaranteed to the company. The finances are therefore separate from personal of the owners.
Companies999 also provide a FREE business bank account, merchant account, accounting software and business telephone services to help our customers successfully launch their personal enterprises.
For more information on Limited Companies, please see our post Company Structures in the UK which will detail the advantages of the structure for you.
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