Most businesses register as a sole trader or limited company, but there are other ways to set up a business. The business structure you choose can affect the way you pay tax and your legal responsibilities.

You can move from one business structure to another. It’s usually easier to move from being a sole trader to a limited company.



SOLE TRADERS

A sole trader is the simplest business structure to set up and keep records for. Sole traders make all the business decisions and keep all the profits after paying tax.



LIMITED COMPANIES

A limited company is legally separate from the people who own it, and is run by one or more directors. There are a number of responsibilities and things to consider when running a limited company.



KEY DIFFERENCES BETWEEN A SOLE TRADER AND LIMITED COMPANY

The table below shows the main differences between being a sole trader and a limited company.