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SOLE TRADER V LIMTED COMPANY

sole trader V Limited Company

6 Jun

When considering whether to operate as a sole trader or form a limited company, there are several factors to take into account. Let’s explore the characteristics and implications of each business structure:

SOLE TRADER

  1. A sole trader is an individual who runs their business as the sole owner and operator.
  2. It is the simplest and most common form of business structure.
  3. Legally, there is no distinction between the individual and the business, meaning the sole trader has unlimited liability for business debts and obligations.
  4. The sole trader has complete control over decision-making and retains all profits.
  5. Tax obligations involve reporting business income and expenses on the individual’s personal tax return.
  6. Sole traders may find it easier to set up and maintain their business due to minimal legal requirements and lower administrative costs.

LIMITED COMPANY

  1. A limited company is a separate legal entity from its owners (shareholders) and directors.
  2. Limited liability protection is a significant advantage. Shareholders are generally not personally liable for the company’s debts beyond their investment (except in certain circumstances like fraud).
  3. The company’s finances and assets are separate from the owners’ personal finances.
  4. Setting up a limited company involves more administrative tasks, such as registering with the appropriate government authority and maintaining annual financial statements.
  5. The company’s profits are subject to corporation tax, and the owners (shareholders) are taxed on any income they receive from the company, such as salaries or dividends.
  6. The company structure can offer credibility and professional image, which may be advantageous when dealing with clients, suppliers, or investors.

Choosing between a sole trader and a limited company depends on your specific circumstances and priorities. Consider factors such as the nature and scale of your business, liability concerns, tax implications, administrative requirements, and future growth prospects. It may be beneficial to consult with a qualified accountant or business advisor to determine the most suitable option for you.

If you’re in the midst of deciding whether to change to a limited company do contact our team on 01775 529345 or drop us a line at office@cbsltd.org – we’d really like to support you with the transition.

Chapmans are here to provide advice and support for your business.

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Bale Services

Been using CBS for last couple of years, absolutely brilliant always there to help. Very reasonably priced. Very professional and trustworthy. Highly recommend.

Toby Bale
Director of Bales Services Ltd
Bobbin About

Have used these guys for a year now and helped us start up our own taxi company, very professional and at the end of the phone when I need them, competitive rates and helpful, would recommend.

Sam Danyluk
Director of Bobbin About Ltd
O Jamieson Kitchens

Jamie comes to my house for appointments, always on time and really helpful, when I left it close to the deadline he got all my receipts and my tax return finished and sent off in a very short space of time, would definitely recommend to anyone!

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Blitz Commercial Cleaning

We have worked with CBS for over 18 months now and have been very pleased with the service we have received. Not only are they approachable and available for even our smallest issues, they manage our accounts with professionalism at all times. They have helped move us from a partnership to a limited company and have guided us through the complexities of the HMRC!
We are planning on growing the company considerably over the next few years and are happy that we have CBS to help with this growth.
Having used a large firm of accountants before, it is a refreshing change to meet accountants with a sense of humour.

John Tipper & Rick Newman
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Fen Air International

CBS has been a great support to our business over the last 6 years, they have given me some excellent guidance through transferring from a sole trader to a limited company and also becoming VAT registered, Paul & Jamie have been a great source of information and advice as my company has grown from a seasonal service provider to what we are today, an international exporter of our own made a/c systems and nationwide in field / onsite service provider.
Without the help and advice from CBS I am sure my companies and personal financial position would be greatly different without their knowledge and advice received on taxation, VAT & duty obligations, and tax efficiency.
A professional , courteous, and efficient accountancy service at a competitive price that I Highly recommend.

Patrick Foster
Director of Fen Air International Ltd
Lincolnshire Parent Carer

Jamie at CBS has provided our Charity with a service that is very competitive and highly professional.
He goes out of his way to attend our AGM and present the accounts.
For anyone who needs a friendly accountant who knows his stuff - would definitely recommend.

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Chairman of Lincolnshire Parent Carer Forum
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