This depends on your goals, liability comfort, and tax situation.

If in doubt, talk to our team of tax experts for tailored advice for your situation.

The most important question to ask yourself is if you need limited liability. E.g. a painter can’t do much damage, but a plumber installing heating systems could have a bigger personal exposure. Limited liability more important for the plumber in these cases.

The second question is can you leave profits in the business or do you need to take out all profit by way of salary to meet your normal living expenses. If the latter, a limited company may not be required.

Here’s a summary:

 Advantages/disadvantages of a Limited Company (provided you can leave profits in the company) are:

  • Pays 12.5% corporation tax – potential tax efficiencies.
  • Limited liability – your personal assets are protected.
  • More admin – CRO filings, separate accounts, company law compliance.
  • Can retain profits – useful for reinvestment and tax planning.

Summary

  • Sole trader: Good for small start-ups with low risk.
  • Limited company: Better for scaling, risk management, and tax efficiency.