A sole trader structure is a good starting point
If you want to test a business idea a sole trader is likely to be the better choice. Later as you grow your business you may want to share liability for the business, take on shareholders and partners, create a more tax efficient structure once your profits grow and it’s a fairly simple process to change to a LTD company.
Sole traders are cheaper and easier to maintain
There are fewer statutory requirements for sole traders to adhere to. Accounting is generally easier and cheaper because sole traders accounts are dealt with by the personal tax return of the owner. Assuming you have no debts, winding up a sole trader tends to be simpler than with a limited company, and no information is held on the public register. Sole traders are subject to fewer statutory requirements (red tape!)
Sole traders are tax efficient up to 40K
You should consider how long your business may take to become established and how quickly it may grow. Self Employed people initially find setting up and working as a sole trader more comfortable to begin with. Your expected income may remain low or take a long time to become established. Often you’re not confident about the prospects for the business or indeed if your long term commitment to it is unsure. Later when your business flourishes you can easily change to register as a limited company. The advantages of setting up as a limited company carries additional administrative costs but in return it does offer more security and flexibility longer term. The potential tax advantages of being limited for married couples is itself a significant benefit.
Sole traders are more private
Sole traders only disclose their private information, including turnover and ownership, to HMRC and this information is not available to the public.
