Published: 09/07/2018 By Robert CoyleSo you want to start your own business – what type should it be?
You have a choice you can set up as a sole trader or you can use a Limited Liability Company to conduct your trade – which is right for you?
Well there is no right or wrong answer – you need to consider the facts & either could be right for you.
What is a sole trader & what are some advantages?
A sole trader is someone who works for themselves – there is no difference between calling yourself a sole trader or self employed. Either way you carry on a trade, supply services, have customers etc...
Being a sole trader is the simplest way of starting a business, but even here there are things you must do such as register with the tax man & pay self employed national insurance ( at least Class II NIC possibly more).
In any event you need to…….
· Register as self-employed with HMRC
· Obtain any permits and planning permission that you may need from your local
· If you are going to have premises (say a restaurant or shop) find out from your local authority if you need to pay business rates
· Have public liability insurance
· Sort your financial admin – do you need to register for VAT, how will you keep records & get paid, what will you do for banking etc.
· But being a sole trader can be the simplest & cheapest way for many businesses to operate & is often appropriate.
So should I use a Limited Company instead?
If you are a sole trader the businesses liabilities are yours – if something goes wrong you can be personally liable. Using a Company can LIMIT your liability (hence the use of the word Limited).
Also frankly there can be a perception issue – over a certain size of contract customers generally expect to deal with a “proper” company.
BUT – using a company increases your legal, possibly financial & admin obligations – so there is a cost involved.
There can also be other considerations – if you have other income (say from property) for tax that gets added to your income as self employed – so it needs a careful look.
So what do I do?
We help businesses start all the time – come in & have a chat or talk to another advisor such as a solicitor or your local Chamber of Commerce.