|A freelancer at work|
|Render Under Caesar What Is Due To Caesar|
Setting up a company is different. You have to pay fees to set the company up in the first place, to register it, and also to file annual reports, as well as paying annual corporation tax. It's much more of a hassle than being a sole trader, and there aren't really any tax advantages.
So why set up a company? There are three main reasons:
- Because your customers and clients make you. Once you reach a certain size, plenty of companies won't like doing business with a sole trader. They are used to dealing with companies, and they will insist on it.
- Liability. As a sole trader, you are personally liable for everything the company does, down to your last penny. Most companies are Limited Liability Companies (hence Ltd) which means that if the company goes bust or gets sued - you won't lose your house.
- It's the grown-up thing to do. Once you start to grow and employ people, it makes sense to have a formal vehicle for your operations. Sole trader status is convenient, but it only makes sense for small operations of low complexity.
To see more about the benefits and burdens of setting up a company versus being a sole trader, see this link: http://www.theguardian.com/small-business-network/2013/sep/12/sole-trader-limited-company-freelances
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