I am a sole trader in my eighth year in business and am considering going limited. What are the advantages?
After eight years, why are you now considering becoming a limited company?
The key advantage is that it does limit your personal liability as a business in case of losses. It may also help you if you are planning to employ staff. However, from a tax position there is no significant advantage: in fact you will need to provide more information both to HMRC and Companies House. This could involve greater accountancy fees or more of your own time in making tax returns.
As a limited liability company there are statutory regulations which do not apply to a sole trader. For instance, company accounts need to be presented in a certain way. As a sole trader your accounts can be much simpler. Also, in a limited liability company, the owner becomes a director and is an employee of the company rather than a business owner. This imposes certain statutory duties.
My advice would be to talk in more depth to your accountant and, if unsure, go for a second opinion. The wrong decision could cause you future headaches, so it’s best to get it right at the very beginning.