Q: Is it better to trade as a limited company or a sole trader if I'm looking for investment?
Feb 22 2010
Answered by: Keith Willey Ask a question
Whether you trade as a sole trader or as a limited company the lenders will consider a number of factors before providing the loan facility.
Therefore the best way to secure the necessary capital is to prepare a sound business plan.
Depending upon the amount that you are looking to borrow, you may be asked for different types of security. For example, if you trade as a sole trader the lenders may ask for some form of intangible security, usually a guarantee by a third party to pay your debt should you default. It may be that the lenders will also require some form of tangible security to back up this guarantee, for example your house.
Whether you trade as a sole trader or as a limited company is a key decision and it is important that you should consider a number of other factors. Being a sole trader is the simplest structure but you will be ultimately responsible for any liabilities should anything go wrong. The limited company route limits the personal liability but on the other hand you will need to deal with any administrative or accounting requirements which are necessary.
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