Sole Trader or Limited Company? How to Decide (Without the Jargon)
You’ve got the idea, the energy, the half-finished Canva logo… but then you hit Companies House and suddenly you’re five tabs deep with a glass of wine in hand thinking:“Wait. What even is a limited company… and do I need one?”
Breathe. You’re not alone…and you don’t need a law degree to get this right. We’re breaking it all down in a way that actually makes sense. No jargon. No judgment. No spreadsheets (unless you really like them…in which case, live your truth).
What Even Is a Sole Trader or a Limited Company?
Let’s keep it simple, shall we?
🙋♀️ Sole Trader
The chillest way to get started.
You = the business. You keep all the profits (after tax), but also take on the risk. It’s fast, flexible, and low-hassle.
🏢 Limited Company
More official vibes.
The company is its own legal thing. You’re the director, the company earns the money, pays tax and you pay yourself from it. More admin, but more protection too.
Let’s Compare (The Non-Boring Way)
| Feature | Sole Trader | Limited Company |
|---|---|---|
| Setup | Quick + easy | Bit more faff (hello Companies House) |
| Tax | Pay Income Tax on profits | Corporation Tax (lower for some) |
| Paperwork | Annual tax return | More forms, annual accounts, etc |
| Privacy | Your info = private | Your biz info is public online |
| Risk | You’re liable if things go pear-shaped | Your personal assets are usually protected |
| Flexibility | Easy to start, stop, change | Bit more structure, great for scaling |
| Client Vibes | Casual/friendly | “Ooh, they’re official” credibility boost |
Real-Life Scenarios: Meet Laura, Jade & Emily
💼 Laura the Consultant
Ex-corporate queen now landing big clients. Wants to grow, maybe hire and likes the sound of “Ltd” after her name.
→ Limited Company could give her tax perks + pro credibility.
💻 Jade the Side Hustler
Running her Etsy biz after the kids are in bed. Wants something super simple to see where it goes.
→ Sole Trader is the dream. Quick, chill, no pressure.
🎨 Emily the Creative Re-Starter
Returning to freelance after a break. Needs flexibility and a confidence boost.
→ Sole Trader is perfect for easing back in without the faff.
What Actually Matters (A Quick Gut Check)
🧠 How much are you earning?
Over £30k? A limited company might save you money (depending on how you pay yourself).
⚖️ How risky is your business?
Selling products, giving advice, or dealing with anything that might trigger a complaint? A limited company can shield your personal assets.
💼 Want to look more “official”?
Some clients (especially agencies or corporates) prefer working with limited companies.
📝 Hate paperwork?
Sole trader = less admin, less stress.
🌱 Can you change your mind later?
Absolutely. Start as a sole trader, go Ltd when you’re ready (it’s harder to go the other way around).
Wait, So Which Should I Choose?
If you want simple, flexible and fast:
→ Sole trader is perfect.
If you're earning more, want protection, or care about looking extra profesh:
→ Limited company might be your best bet.
Still unsure? Don’t panic — this is what Rachael Savage is so good at. One Power Hour with her, and you’ll walk away with clarity, confidence and a clear next step. (Plus maybe even a to-do list that doesn’t make you cry.)
FAQs (Because You’re Definitely Not the Only One Asking)
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Yes, and loads of people do! It’s super common as your business grows.
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Nope. It depends on your income, how you pay yourself, and a bunch of other things. (This is where a chat with Rachael is 💯 worth it.)
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Yes, Companies House shows your name and address…but you can use a service address if you want to keep things private.
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As a sole trader, you’re personally liable. With a limited company, your personal stuff (like your house) is usually protected.
Still Not Sure?
You don’t have to keep Googling at midnight or second-guessing every choice.
✨ Book a Power Hour with Rachael Savage | Accountancy Queen
She’ll walk you through your options in plain English and help you feel 100% sure you’re choosing what’s right for you.
Let’s get you sorted. One hour, one hop forward. 🐸💼✨
