What is the difference between being a sole trader and having a limited company?
A sole trader is essentially a self-employed person who is the sole owner of their business, they have unlimited personal liability for the business whereas a Limited Company is legally separate from its owner who has limited liability. The other main difference is how they get taxed. A sole trader’s profit gets taxed on their self-assessment tax return. A limited company pays corporation tax on the profit and the owner of the limited company only gets taxed personally on what they withdraw from the company whether that is a salary or dividends.