Hi, I am just starting up and wondered whether I should register with HMRC as a Sole Trader or a Ltd company? Can you advise how you are set up?
I personally feel that unless you plan to work for major corporate or public organisations who need you to be a Ltd company … it’s much better to steer clear of the added accounting pressures involved in registering with Companies House.
I found that the gov.uk really made the differences clear and certainly helped me realise that as a sole trader I could do everything I needed to - including grow in the future - with my target audience.
The only thing is, your brand is not protected (but then registering only gives you limited protection anyway). For that you need to trade mark it which I haven’t done yet as it cost £170 and then a yearly renewal fee if memory serves.
Hope that helps
Hi there. I’m also just starting up and for me personally I felt being a Limited company was best.
Tbh, I didn’t do a huge amount of research but from what I did it seemed to suggest that financially Limited companies have more tax saving than sole trading (sometimes minimal mind), plus I’m more protected in terms of liability (ultimately it’s limited liability - it’s the business they go after and not me personally). When I spoke to my broker the other day, he was happier when I said I’d set up as a limited. I also felt it looked more professional and I might be taken more seriously. That’s of course not to say that anyone who is a sole trader isn’t that (!!!).
Very best of luck with what you choose. Maybe it’s a case of pros and cons for both and the right answer will be down to you personally.
Thank you for your input, appreciate it.
Thanks Adrienne - appreciate your input.
Definitely have a chat with an accountant about this - but usually for VAs, sole trader is the better set up.
Reasons to be sole trader:
- You can be “Joe Bloggs trading as XYZ Admin” and brand yourself as XYZ Admin on the website etc.
- There is less accounts admin, in terms of reporting and paperwork you need to give to HMRC.
- A lot of the protection offered by a Limited Company can also be offered by getting proper professional liability insurance.
Source: UK VA Survey v9
So a little less than 20% are Limited Companies and only 12% opt for this as a solopreneur.
Good reasons for being limited:
- If you want to trade with the public sector - quite a few procurement depts will insist on a Ltd Co.
- If you have intention to sell the business - it can be easier to package if it’s in a Ltd Co already.
- If you have another business which you want to keep separate from your VA business
Bear in mind that accountants and lawyers do make more money out of you setting up as a Ltd Co as opposed to a sole trader!
This information is really helpful.
Another reason for being limited - if you want to brand the business as xxx not your own name or have your name on everything. If you expect to work with another person - either as another employee or director it can be clearer as a limited company.
You can still be “Your name trading as Business Name” through Wendrie.
I guess the perception is about how you introduce yourself - I’m not limited, although we work as a team. But there has always been the brand and the team there, so that’s never really been an issue.