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What are the pros and cons of setting up as a Sole Trader vs a Limited Company? 

We’ve gone through the basic considerations for both and directly compared them so you can get a clearer picture on which is best for you. Areas to consider when setting up your business include: 
 
Financial Liability 
Status & Professionalism 
Finance Options 
Publishing Personal Details 
Business Name Protection 
Tax Requirements 
Administration Requirements 
Employment 
Insurance 
 
Sole Trader 
Limited Company 
Financial Liability 
If your business runs up any debt you are legally required to cover it, this may mean even selling personal assets. 
Financial Liability 
By setting up a limited company your business becomes a separate legal entity. Therefore if the business does run up debts the business, rather than you personally, are reasonable. 
Status 
You can build a great reputation as a sole trader and many customers won’t know the legal ‘status’ of your business or, to be honest, care! They are there for your amazing products and service after all. 
Status 
Having said that, some suppliers & clients may feel more secure dealing with a company that has gone through the formation process. Once you get larger and becoming more prominent it may be time to form a limited company. 
Finance Options 
Along with being financially liable for the business, raising funds may be more difficult. Options as a sole trader include; savings, friends & family lending, go fund me pages, and some banks will loan you money however you may be considered too ‘high risk’ and refused. But if your over-heads are low and your cash flow good this may not be a concern for you. 
Finance Options 
You will have more financial options open to you and be more likely to be approved for a loan from a bank or lending organisation. All the options of a sole trader will be available to you along with more official routes. If you need a premises to operate from, need to buy equipment or require some start-up cash to get you going forming a limited company will make it easier when applying for finance. 
Personal Details 
Increased privacy. Your personal details won’t be published on Companies House. 
Personal Details 
You will have to publish your name (as a director), the names of fellow directors and your business address on Companies House. You can limit the amount of information out there by registering with a secretarial business service eg business address but some details have to be made public. 
The Name of Your Business 
Business name protection. As a sole trader you may be worried about others operating with a similar name to take advantage of your good reputation, advertising efforts and word of mouth promotion from customers. You can take out Business Name Protection here with NBR to stop this from happening. 
The Name of Your Business 
No one can use the exact same business name as you, they legally won’t be able to form the company. However this doesn’t cover you in every situation, they could add an ‘s’ to the name or ‘solutions’ etc so their name ends up being very similar to yours. You can take out business name protection to stop this, find out more here.  
We hope our battle of the businesses has helped you make the decision which is best for you. Remember the hardest part is taking the first step, get out there, even if everything isn’t perfect and try! 
 
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