At a glance, a sole trader business structure or vehicle is relatively less expensive to set up and maintain, and it gives you better autonomy when making decisions.
A company structure, on the other hand, means you have limited liability and you can bring in shareholders.
Before anything else, we should understand the understand distinction between the two.
In this business structure, the person running the business, aka. a “sole trader”, is the only individual responsible for running and managing every aspect of the business, including all debts and losses which (s)he must bear alone.
A company is what we define as a separate legal entity. It’s quite the opposite of sole tradership. This means that organisations using it as a business vehicle have some rights, they can incur debt, they can sue and be sued, etc.
In this case, the organisational owners are shareholders, which means that personal liability can be limited and none of the shareholders are liable to pay any company debts above the share nominal value.
Setting up either of the above as a business vehicle will, naturally, bring a unique string of benefits as well as drawbacks in comparison to different other entity types. Let’s take a closer look then:
Hopefully, this quick read has given you a glimpse of what it means to either go into business as a sole trader or limited company.
If you require any help with your business structure and tax duties, we at Key Business Consultants LLP have an expert team of accountants who will be able to assist. Get in touch with us today.
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