In contrast to running a Limited Company you won’t need to register with Companies House and you won’t need to pay corporation tax. All that said, as a Sole Trader you’re subject to unlimited liability, meaning that you’ll be personally liable for any of the debts the business runs up – that’s not the case if you’re a Limited Company, as I’ll explain later.
Elsewhere, Sole Traders often struggle to raise investment and borrow, which is something worth bearing in mind if you’re trying to take your start up to the next level.
To sum up then, as a rookie entrepreneur it’s probably best to start up as a Sole Trader, given all the paperwork and HMRC fuelled responsibility that’s involved with going Limited. Consider going Limited as you grow and plough more money into your business though, as it’ll help attract investors, free up funds and make your business look that little bit more professional.


Fresh Young Millionaire is the only business magazine for young people (and the young at heart). Something that’ll face you as an aspiring entrepreneur is choosing the right legal structure for your business. Many entrepreneurs adopt this initially as operating as a Sole Trader can be so much less complicated than starting out as a Limited Company. The tax benefits only really come when you’re earning in excess of ?25, 000 and given the increased burden, trading as a sole trader will spare the grief of the added paperwork and legal responsibilities. He currently works in-house for Crunch, an online accounting firm for freelancers, contractors and small businesses.


With an assortment of options out there it can seem confusing to choose which might be the right one to adopt, but, more often than not, it’ll be a decision between these two. A separate legal entity to the business, if your company goes bust your personal belongings won’t be touched.



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