Sole Traders Services

Directors of limited companies pay themselves in a different way – usually through a mixture of salaries and dividends. In general, directors pay less tax than sole traders however there are additional administrative requirements in setting up and running a limited company.

Generally, if you earn more than £30,000 a year as a sole trader, there may be a financial advantage into setting up a limited company. However, the calculations are different for every sole trader so we would encourage you to contact us to run a few worked examples on your income so we can show you how much tax you would pay as you are now and as you would be if you incorporated.

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Tools and resources

The key pros of a sole trade include:

• Low cost, easy to set-up;
• Full control retained; you can minimise costs in order to maximise your profits;
• Minimal financial reporting and information in the public domain; and
• It’s easy to change your minds and close the business if it doesn’t work for you.

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Tools and resources

The key cons of a sole trade include:

• Full liability for debt i.e., no limitation of liability;
• Often pay more in tax, once you get to a certain size;
• Decision making sits only on the shoulders of the sole trader, which can be good or bad depending on the individual; and
• Lacks credibility in market meaning often less access to finance

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Tools and resources