Self-employed (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.


A 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. 


Ultimately, you need to weigh up the difference between a Sole Trader and a Limited Company, as the structure you choose could impact everything from profits to paperwork. If you only seek to work gigs via YoungOnes, we recommend opting for Sole Trader.


Below we have listed the pro's and cons, so in case you are still in doubt.


Sole Trader

Pro’s

Easy to set up and relatively little paperwork, other than an annual Self Assessment tax return

Greater privacy than incorporated businesses, whose details can be found via Companies House


Cons

Sole traders have unlimited liability, which means there’s no legal difference between themselves and their business – so if the business gets into debt, the business owner is personally liable

Sole traders can lose personal assets if things go wrong

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


Limited Company

Pro’s

A limited company is legally separate from its business owner, who has limited liability

Personal assets aren’t exposed – you only stand to lose what you put into the company

Limited companies stand to be more tax efficient than sole traders, as rather than paying income tax they pay corporation tax on their profits.

Cons

Limited companies have more responsibilities. These are known as the director’s fiduciary responsibilities.

Can be costly and time-consuming, as you’ll need to either deal with this extra paperwork yourself

Information about your business can be found via Companies House, meaning details on directors and your company’s earnings are required to be shown publicly.