If you are running your own business, you must decide whether to operate as a sole trader or a limited company. There are significant benefits to trading as a limited company, including:
Tax efficiencies
With the help of a Swindon accountants such as https://www.randall-payne.co.uk/services/accountancy/swindon-accountants/, you can set yourself up as a limited company, allowing you to pay corporation tax rather than income tax, claim a wide variety of business expenses and pay yourself a combination of salary and dividends which will also reduce your annual tax bill.
Limited Liability Protection
As a sole trader, you are personally responsible for your business’ debts and legal issues, whereas as a limited company, your business is a separate legal entity and your personal and business finances are completely separate in the eyes of the law.
Credibility
Customers are more inclined to trust a limited company than a sole trader, perceiving them to be more trustworthy due to their presence on the Companies House website.
Easier to obtain investment
Banks and building societies are more inclined to lend to a limited company than a sole trader, so if you are planning to grow your business, being a limited company offers more opportunity for funding.
Administrative benefits
As your personal and business finances are separate when operating as a limited company, it is easier to account for your business income and expenses.
In conclusion
If you will earn more than £50,000 a year and wish to protect your personal assets, it may be wise to establish yourself as a limited company.
