What is the difference between a Limited Company and a Sole Trader?
A limited company is a legal structure where the company’s finances are separate from the personal finances of the owners. A limited company must have a director, a company secretary and shareholders. The company must be registered at Companies House and is required to make regular submissions to HM Revenue & Customs. A sole trader is an individual working on their own account and without a corporate identity. This means that they are able to keep all the profits from their work but that they are personally liable for any debts run up in the course of trading. A sole trader must maintain records showing income and expenses and file an annual self-assessment tax return with HM Revenue & Customs.
