Sole Trader vs Limited Company

Should you be a sole trader, or set up a limited company? It’s the question every UK business owner runs into, and the answer shapes how much tax you pay, what you’re personally liable for, and how your business is seen. This video walks through the trade-offs without picking sides. It covers what each structure actually is, the liability firewall a limited company puts between you and the business, and the different tax mechanics of income tax and National Insurance against corporation tax with salary and dividends. It looks at the admin gap (one self-assessment return versus annual accounts, payroll, and a confirmation statement), the softer factors of client perception and pension contributions, and finishes with the four triggers that usually make a switch worth it: growing profits, asset protection, client requirements, or retained earnings for reinvestment.