Sole trader or limited company?

[swirlyarts]

Having looked at the tax thread I noticed that several people are sole traders. Hubby and I have set up a limited company purely so that if (and we are hoping this will never happen!) the company went bankrupt, then it would be limited to the company and not us personally. So are there any benefits to being a sole trader? We had to set up as a limited company due to the nature of my husbands work as no-one would employ him if he were a sole trader - I was just wondering what the main differences are between the two.

[Seahorse]

Sorry, I dont know.I only recently was told that where I work now is a limited company and what it meant.

Id be interested to know too.

[carolinemhannon]

i haven't got a clue, i registered for tax but they didn't mention anything about sole trader or limited company

mind you mines just a hobby where i sell what i make, i'm not in it to make big profit, i just sell to get money to buy more materials so i can make more beads

[0103media]

Thats correct..

The real differnece is that the business will be liable not you as a person..

The other side its that the business needs to pay u a salary..

Thats about its really..

[swirlyarts]

Also a limited company means that you do have a lot of paperwork to do as you have to send your details to companies house at the end of each year. Fun fun!!

[Ioannes]

Hi

The differences between the two ways of operating are very different, as a sole trader you are classed as self employed and file a tax return at the end of the financial year as such. If you start a limited company it is a legal body in its own right and it employs you so you become employees of the company and therefore in has to pay you a wage or salary under the PAYE system. In addition a company has to have two directors, one of those being the company secretary who is responsible for the company records and accounts, which have to be drawn up each year and submitted to Companies House, as a public record of your accounts.

Ioannes

Having looked at the tax thread I noticed that several people are sole traders. Hubby and I have set up a limited company purely so that if (and we are hoping this will never happen!) the company went bankrupt, then it would be limited to the company and not us personally. So are there any benefits to being a sole trader? We had to set up as a limited company due to the nature of my husbands work as no-one would employ him if he were a sole trader - I was just wondering what the main differences are between the two.