03/08/2021
🧐 Thinking about starting a business but can't decide whether to register as a sole trader or a Limited company?
Starting a business is a huge step and knowing how different types of businesses operate will make running your business a lot easier. Below are some key differences between operating as a sole trader and a limited company.
Ownership:
👤 As a sole trader, you are the business, the owner and the manager. In the event of any legal dispute, you will be sued personally unless you have suitable insurance cover.
🏢 As a limited company, the business is a separate entity, you are a shareholder and you serve the company as a director. In the event of any legal dispute, the company will be sued unless it has suitable insurance cover.
Tax on profits:
👤 As a sole trader you are self-employed and will be in charge of paying your own taxes including Income tax and National Insurance.
🏢 As a limited company you are an employee of the business and the company must pay corporation tax as well as PAYE and National insurance
Paying yourself:
👤 As a sole trader you can withdraw as much money as you like from your profits without any tax effect.
🏢 As a limited company you must be on a salary to be paid. There is no restriction to how big your salary is, any amounts withdrawn from the business that do not relate to your salary must be paid back to the business.
Visit our blog on our website to find more information on these two different business types and what may be best for you.
https://www.anlewisbookkeepingltd.com/blog
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