One of the first decisions you'll make when starting a business is choosing your legal structure. The two most common options for small businesses in the UK are sole trader and limited company.
Sole Trader: This is the simplest structure. You and your business are legally the same entity. Setup is instant and free, there's less admin and compliance, and your accounts are private.
Limited Company: Your business is a separate legal entity. This means limited personal liability for business debts, potential tax advantages, and more credibility with some clients.
When is a limited company more tax-efficient? Generally, once your profits exceed around £30,000-£50,000 per year, a limited company structure can be more tax-efficient.
The best advice? Talk to an accountant. At Clever Accounts, your dedicated accountant will assess your situation and recommend the most tax-efficient structure for your business.