Is it better to be a Sole Trader or a Limited Company?
It's always an interest question when starting out.... what format should my business be, and there are pro's and con's to both.
A sole trader is basically someone who is self employed where as a Limited Company is a separate legal entity to the business owner. So it depends on what you think is the best route for you and your business, but before making that decision, I would ask you to consider where you want the business to be in 5 years time.
Pro's of being a sole trader;
Easy to set up
Only required to submit annual Self Assessment
Con's of being a sole trader;
Unlimited liability - there's no legal difference between you and the business, so if the business goes into debt you are personally liable. You can also loose your personal assets such as your home if things go wrong.
It can be difficult to raise finance, especially as investors prefer to deal with companies.
Tax rates aren't always as advantageous as they are to companies
Pro's of being a limited company;
Your company is a separate legal entity to you, meaning that you have reduced liability
Once registered, no one else can use your company name
Limited companies can be more tax efficient
Con's of being a limited company;
Limited companies have more responsibilities (legally)
Your company can be searched on the companies house register
You'll have to submit annual returns and pay corporation tax