One of the first big decisions we all have to make as business owners is whether or not to set up as Limited Companies or Sole Traders.
As both of these legal structures have completely different implications it’s important to understand which each of these mean and how they may affect the way you run your business. I’ve created a FREE Business Model Comparison Guide to help you decide.
A limited company is its own legal identity. The clue is in the name ‘limited’ as essentially you are a shareholder in the company and therefore your liability is limited also.
The reverse is true for sole traders. Essentially you are your business and there is very little distinction between the two, which means any issues or debts would be yours to handle.
When I started Digital Marketing London I decided to set up as a Limited company. This is because I was consulting and training a lot of multi-national businesses very early on in the business. (Something to consider if you plan on trading with big businesses as their procurement team may prefer to work with a limited company.) Also, as one of my training offerings was delivered in partnership with another business I wanted to limit the liability for my own business – just in case things with that 3rd party business changes.
That said, when I was a freelance consultant or if you’re a coach, freelancer or run a lifestyle business with maybe some remote staff or VA then a Sole Trader set up may be better for you.
I’d always recommend you continue to research and decide what’s best for you.
In this video I also outline a few more things your may want to consider including Tax Implications, National Insurance, Accounts & Returns.
If you’re still unsure of which legal structure is right for your business, I’ve created a free a ‘Business Model Comparison Guide’ which looks at the Pros and Cons of the most common types of business models, which I’ve linked below.
Do you dream of running a large-scale business with a large team or, like me, do you prefer more of a simple set up with minimal overheads? For me and my dream business, it’s important that, even as a limited company, I run a lean and nimble business that allows me to travel or take time off easily and work with remote teams, so I can hire the best regardless of where they are in the world.
What does your dream business look like? I’d love to hear in the comments below.
Oh and don’t forget your FREE Business Model Comparison Guide to help you decide.