June 17th, 2025.




Smallbusiness.co.uk has compiled a list of the top six questions most frequently put to our panel of business adviser experts.

1. Should I be self employed or a sole trader?
Whether you register as a sole trader or as a limited company is a key decision when starting a business. If the decision is to start as a sole trader, it is prudent to review the situation after the business has become established. Basically, a limited company provides opportunities for saving tax but it involves a higher level of bureaucracy which you must either undertake yourself or pay others to do so on your behalf. Limited liability might also be advisable if the business venture is particularly high risk.

Forming a limited company has a number of implications, particularly in terms of taxation of profits. There are a small number of ways you can take money out of a limited company – dividends out of profits, a salary which is subject to Pay As You Earn (PAYE) and National Insurance Contributions (NIC) or by repaying a directors loan account which is in credit. A sole trader on the other hand can take money out of the business as frequently as they like, provided it does not leave the business short of funding.

The tax administration required will also be different, although businesses, self-employed individuals, and landlords with income over...

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