Business
What is the difference between a sole trader and limited company?
A sole trader runs the business personally and reports profits through Self Assessment. A limited company is a separate legal entity with directors, shareholders, company accounts, and Corporation Tax.
Last reviewed: 2 June 2026
Sole trader is simpler
Sole trader admin is usually lighter. You still need good records and tax returns, but there are fewer Companies House obligations.
Limited companies add structure
A company can offer limited liability, different tax planning options, and a more formal structure for ownership. It also brings more filing duties and director responsibilities.