Sole trader or Limited Company

[Nitnat]

Starting out as a Letting agent - can anyone give advice on which is best - sole trader or limited company? I understand the difference but am unsure as a starter business with high hopes of progressing the business whether it would be better to start as a limited company and have the business name protected along with being able to expand easily or start as a sole trader with perhaps the possibility of moving over to a limited company as the business expands. Is setting up as a limited company (with all the extra paperwork) worth the trouble? :confused:

[Editor]

There are pros and cons of using both and a lot depends on your personal circumstances - you should do some reading up about this from books and guides on this site and also ask a competent accountant because a lot of the differences are to do with taxation.
Another major factor is managing your risk: as a sole trader you carry unlimited liability for negligence. As an agent you will need good insurance cover including public liability and professional indemnity insurance. The latter is the most difficult to secure if you are not fully qualified and experienced.
Therefore a limited company may afford you protection despite its higher running costs, employed as opposed to self-employed status, and tax differences etc.

[MrShed]

IMO, start out as sole trader, and once it is established limited company. At the start, you will simply not make enough turnover to justify the extra work and expense required for a limited company. However, once you have reached this level of income, it is preferable to make it limited, both for the reason Editor has said above of liability of negligence etc, and also the unlimited personal liability to any creditors.

Although everyone is tempted to think that they will not make a mistake, bear in mind:

- The industry has a learning curve and you are almost bound to make a mistake at some point.
- Courts are not always, despite their best efforts, 100% correct in their decisions!

Good luck.

[choices]

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Am new to the forum and gained valuable tips from it. Am starting as a sole trader, with a view to qualify as soon as I can and to be as ready as possible for any new rules and regs that come out. At some stage will go Ltd. expecting a steep learning curve in the first year, but love a challenge! :rolleyes: