So you’re making money and now it’s time to decide if staying self-employed as a sole trader, or setting up a limited company is the best choice.
There are pretty much only 3 real questions that you need to ask yourself:
- Do You Think You Will Have Any Business Expenses?
- Will You Need To Borrow Money For Your Business?
- What’s The Future For Your Business?
Do You Think You Will Have Any Business Expenses?
If you think you’re going to run up business expenses there are some major tax benefits to setting up a limited company.
You’ll be able to claim back things like business travel expenses and equipment costs.
So if you’re going to be buying that fancy MacBook or a new van…you’ve got to think about setting up a limited company.
Will You Need To Borrow Money For Your Business?
As a sole trader you are completely responsible for any debts your business gets into! If things go wrong you could end up in financial madness, personal financial madness.
With a limited company you’re not fully responsible for any debts the business gets into, this is called limited liability.
What’s The Future For Your Business?
Some businesses are just good saying small. You’ll earn good money, minimal stress with complete freedom & control. These businesses are great for sole traders.
If you’re thinking about growing your business to be bigger, hire staff or take on any debt then setting up a limited company is usually best!