Limited Company Vs Sole Trader: Mind-map graphic
This is a question that we get asked over and over. I have laid out the various pros and cons in mind-map format and hope you can see it clearly. My preference is certainly for a limited company but many go for the simplicity of the sole trader and associated cheaper compliance costs. Certainly if you are a very small trader with little travel, it probably makes sense. You can always incorporate at a later stage. However for the vast majority of businesses I think a company is the appropriate structure for the following main reasons:
- Much better treatment of taxes, pensions and allowable expenses
- Limited liability safeguards the owner’s private assets
- Much more flexible structure for business combinations, taking in partners, sourcing finance etc.
In the mind-map below I get into detail on all the different areas. Anybody out there with a contrary opinion or any feedback at all I’m all ears.