Sole trader or limited company?NEW

Most illustrators start their working life as self-employed, also known as a sole trader. They file a personal tax return each year with HMRC which gives details of their business income and allowable expenses, as well as other relevant details. In legal terms, the business is an extension of themselves.

Many illustrators stay as self-employed throughout their working life.

Some, however, decide to form a limited company and transfer their sole trader business into that company, a process known as incorporation. They become the director of the company and are probably the sole owner too.

To help you decide which may be suitable for you, we’ve laid out a number of points to consider. The default position is trading as a sole trader and not as a limited company. You should think carefully before you decide to transfer your sole trader business into a limited company, it could prove an expensive mistake.

The law surrounding sole traders and limited companies changes regularly and you should take professional advice before making any change.

This resource has been prepared by Nick Weeden, Chartered Accountant.  All members are entitled to an hours free consultation with Nick. If you have any difficulties do not hesitate to contact HMRC or take advantage of your free consultation with Nick by emailing the AOI.

The AOI would like to make resources accessible to all members. If you would like an alternative format please ask.

 

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