Sole Trader or Limited Company?: The Difference

Last Updated
July 21, 2010

Introduction – Is Being a Sole Trader a Disadvantage?

At some stage during your business career the question that most of us have to deal with is whether or not to form a limited company.

Often, the desire to incorporate (become a limited company) comes from factors that are less to do with business legislation and more to do with our perception of what a business should be.

For example, ‘businesses feel safer dealing with limited companies, ‘things are more organized in limited companies’, ‘employees don’t like working for non-limited companies’ and of course ‘I will have no debts with limited liability’ etc.

The truth is that some businesses can be more profitable, easily administered & less bureaucratic, and encumbered by less legislation by remaining a sole trader instead of becoming a limited company.
By reading the article, you should get an outline of what is required to run a limited company and you will notice that most of the article concentrates on the limited company as that is the real issue here: “Do You Want to Form a Limited Company?” …lets start at the beginning. The article will outline and compare the legal forms and requirements of:

  • A business (i.e. a sole trader, self employed, etc)
  • A limited company
  • A partnership
    • Full partnership
    • Limited liability partnership

Article Index

  1. Sole Trader or Limited Company
  2. Sole Trader or Limited Company?: A Business
  3. Sole Trader or Limited Company?: A Company
  4. Sole Trader or Limited Company?: Partnerships
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