What is the difference between sole trader and limited company?

Geoff Brice  Consultant
A limited company is its own legal identity, so as a shareholder your liability is limited (hence the name 'limited by shares'). As a sole trader, there is little distinction between you and the business. Any business debts become your debts and your personal assets - including your house - are not protected.
May 10th 2018 07:49   

Madhavi Khandwala  IELTS COACHING CLASSES IN AHMEDABAD
Unlike a sole trader a limited company has the benefit of limited liability, as incorporation forms a legal distinction between the business owner and their business. ... Once you've registered a company name nobody else can use it, in contrast to sole traders who aren't offered the same protection.
May 11th 2018 05:14   

SM Kollectionz  We Know what is hot and what is not
A limited company is its own legal identity, so as a shareholder your liability is limited (hence the name 'limited by shares'). As a sole trader, there is little distinction between you and the business. Any business debts become your debts and your personal assets - including your house - are not protected.
May 11th 2018 08:25   

Gaurav Bansal  Company Registration Consultants in Delhi
A sole trader is a singular trader. This is what you wold call a sole proprietorship company. Now, a sole proprietorship company only needs the PAN card of the company, and they do not need to adhere to any sort of compliance. Whereas a limited company requires at least 2 directors or owners. They also require at least 2 shareholders and once they are registered, they would be have to adhere to the annual compliance set up by the Companies Act 2014
Jul 10th 2018 03:00   

GWS Offshore  Business Consultant & Management
Sole Trader: A sole trader is essentially a self-employed person who is the sole owner of their business. It’s the simplest business structure out there - which is probably why it’s the most popular.
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Sole Trader Advantages:
1. Easy to set up and relatively little paperwork, other than an annual self-assessment tax return.

2. Greater privacy than incorporated businesses, whose details can be found via Companies House.
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Sole Trader Disadvantages
1. Sole traders have unlimited liability, as they’re not viewed as a separate entity by UK law. This means that if the business gets into debt, the business owner is personally liable. As such, sole traders could lose personal assets if things go wrong.

2. Raising finance can be tricky, as banks and other investors tend to prefer limited companies. This limits the expansion opportunities of sole traders.

3. Tax rates on sole traders aren’t always as kind as they are on limited companies. When you reach a certain level of earnings, it might not be quite as lucrative to stay a sole trader.
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Limited Company: A limited company is a type of business structure that has its own legal identity, separate from its owners (shareholders) and its managers (directors). This remains the case even if it’s run by just one person, acting as shareholder and director.
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Limited company Advantages
1. Unlike a sole trader a limited company has the benefit of limited liability, as incorporation forms a legal distinction between the business owner and their business. This means that personal assets aren’t exposed – you only stand to lose what you put into the company.

2. Broadly speaking, limited companies stand to be more tax efficient than sole traders, as rather than paying Income Tax they pay Corporation Tax on their profits. As things stand this offers a kinder tax rate, meaning forming a limited company can be more profitable. In addition to this, there’s a wider range of allowances and tax-deductible costs that a limited company can claim against its profits.

3. Once you’ve registered a company name nobody else can use it, in contrast to sole traders who aren’t offered the same protection.
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Limited Company Disadvantages
1. Life as a limited company brings added responsibilities. These come in the form of what’s called the Director’s Fiduciary Responsibilities, which basically outline what a limited company director must do legally. You’ll need file a yearly annual return for one, as well annual accounts.

2. Thanks to these added responsibilities going limited can be costly and time-consuming, as you’ll need to either deal with this extra paperwork yourself or hire an accountant to handle it. You’ll need to pay a fee to incorporate too check out our guide to setting up a limited company to learn more)

3. In contrast to sole traders information on your business can be found via Companies House, details on directors and your company’s earnings required to be shown publicly. This sort of transparency may not appeal to all.
Aug 17th 2018 02:15   

Gaurav Bansal  Company Registration Consultants in Delhi
A sole trader can be referred to as the Sole Proprietor ship Company. Now, when you compare this to a limited company, the difference are the following:
1. You do not need to register a Sole proprietor ship company. However, registration is the essence of a private Limited Company.
2. There are no compliances for a sole proprietorship company. However, there are many for a limited company.
Aug 23rd 2018 04:03   

Legal Docs  
A limited company is its own legal identity, so as a shareholder your liability is limited (hence the name 'limited by shares'). As a sole trader, there is little distinction between you and the business. Any business debts become your debts and your personal assets - including your house - are not protected.
Aug 29th 2018 02:59   

Sunil Limaye   MARKETER
You have got so many answers and they have covered the issue elaborately. If you have your own sets of skills and start your business early and avoid the regular compliances required for company you can become a proprietor.
Sep 1st 2018 23:09