Company Formation
COMPANY FORMATION
Which business structure is better for you - sole trader or limited company?
There are pros & cons for both options. This is something we can go through with you. To give you some idea, though, please see below:
What is a Sole Trader?
A sole trader
is a term referred to someone who is self-employed and works on his own. A sole trader must register with HMRC for self-assessment.
What is a Limited Company?
A limited company
is legally a different entity to an individual and must be formed, or incorporated, with Companies House.
What is the difference?
In a business sense there is not a great difference as the business activity does not change depending on the business structure. However a limited company has a lot more rules to follow and there are more deadlines and responsibilities to meet.
Which one is better?
There is no right or wrong answer here, However, limited companies are very popular due to the flexibility it offers for remuneration planning.
What is remuneration planning?
When you operate through your own limited company you just decide how to pay yourself. A combination of salary and dividends is often one of the most tax efficient ways to extract profits.