When starting or growing a business, choosing the right structure is one of the most important steps you’ll take. Whether you operate as a sole trader or a limited company can influence your tax obligations, personal liability, and how easily your business can grow.
At Jackson and Green Accountants, Business and Tax Advisers, we work closely with business owners to help them understand the implications of each structure, so they can make confident, informed decisions that support their goals.
Sole Trader
A sole trader structure is the simplest and quickest way to start a business. It involves minimal paperwork and offers complete control, as there’s no legal separation between you and the business.
Key points:
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Simple setup and management: Registering as a sole trader is straightforward, with fewer legal and reporting requirements.
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Full control: You make all the business decisions and keep all profits after tax.
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Personal responsibility: You’re personally liable for any debts or legal issues the business faces.
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Taxation: Sole traders pay tax on business profits through self-assessment.
This structure can be ideal for freelancers, contractors, consultants, and small business owners who want a straightforward way to operate, especially in the early stages.
Limited Company
A limited company is a separate legal entity from its owners. This separation can offer more flexibility, protection, and potential tax advantages — but it also comes with greater administrative responsibilities.
Key points:
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Limited liability: Your personal assets are protected, and you’re only liable up to the value of your shares.
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Professional image: Operating as a limited company can help build trust with clients, suppliers, and investors.
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Tax efficiency: Depending on income, a company structure may offer lower overall tax liabilities.
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Increased responsibilities: There are legal reporting requirements, including filing annual accounts and a confirmation statement with Companies House.
This structure often suits businesses with growth ambitions, those looking to bring in partners, or those that want to protect personal assets as the business expands.
Key Considerations Before Choosing
Every business is different, and the best structure for you depends on your goals, financial position, and level of risk. Here are some important factors to think about:
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Liability: Sole traders are personally responsible for business debts, whereas limited company directors have limited liability.
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Tax: The way profits are taxed differs significantly between the two structures.
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Administration: A limited company comes with additional paperwork and reporting.
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Flexibility: Limited companies can make it easier to grow, hire staff, or seek investment.
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Future plans: Consider not only your situation now but where you want your business to be in the next few years.
How We Can Help
Making the right decision at the start can save time, money, and stress down the line. Our experienced team can:
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Explain the advantages and disadvantages of each structure.
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Assess your business goals and financial situation.
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Provide tailored tax and legal guidance.
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Support you with registration and compliance.
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Help you adapt your structure in the future as your business evolves.
Get Expert Support
If you’re unsure which structure is right for your business, we’re here to help you make an informed choice and set you up for success.
Address: 81 High Street, Cosham, PO6 3BL
Phone: 023 9222 4400
Email: info@jacksonandgreen.co.uk
The right structure is the foundation of a successful business. With the right advice, you can start strong and build with confidence.
