Sole Trader vs Limited Company

[SELONDMUM]

I’m unsure of which to set up as. I’m about to enter the world of freelance so it’s not a business being set up, more that I’ll be charging a day rate to agencies in the creative industries for my time. I lost my job a few months ago, while in the early stages of pregnancy. I’ve tried to get a permanent role since (I’d actually had a first interview for a job before I was pregnant but after a lot of back and forth interviews lasting months etc it suddenly didn’t work out). I’ll be taking as long off as we can afford after the baby is born which will hopefully be about 9/10 months (with my husband hopefully doing a couple of months shared parental leave towards the end) but will also be searching for a perm role for when I return off maternity leave. But for right now with only 4 months to go freelance is the best bet.

From what I can see the tax advantages of a limited company are more appealing but the process a lot more complicated and as it might be such a short term thing perhaps the simplicity of having registering as a sole trader is best. It’s all such a new world to me that I’m not sure what to do, any advice would be great!

[DelilahBucket]

For the sake of four months, personally I would just stick with being a sole trader. That is unless you need to protect your personal assets, for example if there is any chance if someone coming after you for money.
That said, a chat with an accountant might be a good idea.

[Christmascracker0]

For the sake of 4 months, sole trader is much simpler. You can take stock in a year or so - it mostly depends on how much you expect to earn. (I’m a tax adviser 😊)

[SELONDMUM]

I think that’s the thing, I have no idea. I might only gets a few weeks booking here and there. I have something already lined up starting soon but even getting that took a super long time. My day rate is high enough so in one way it’s good as if I do get booked it’ll pay well but also I’m more expensive so might not get roles as often. But as both of you have said for the sake of a few months, and less stress as I had A LOT at the start of my pregnancy sole trader sounds like the money straight forward route.

[SELONDMUM]

More not money!

[CouldIHaveThatInEnglishPlease]

The tax benefits of being limited only kick on when your earning £50k+ but even then you have to factor in higher accountant fees and risk the gov suddenly increasing corporation tax.
I personally think if you are working freelance and don’t need stock and dealing with suppliers etc, then I would stick with sole trader

[morecoffeeJD]

@CouldIHaveThatInEnglishPlease

The tax benefits of being limited only kick on when your earning £50k+ but even then you have to factor in higher accountant fees and risk the gov suddenly increasing corporation tax.
I personally think if you are working freelance and don’t need stock and dealing with suppliers etc, then I would stick with sole trader

Exactly. +1 for the sole trader option. 

[Comefromaway]

Going limited has no advantages unless you are earning 50k plus or are likely to get into debt eg if a customer doesn;t pay you which means you can't pay a supplier then as a sole trader you can be sued personally.

[andymary]

Defo sounds like Sole Trader is the right fit for you.

[LondonGrimmer]

How did it go OP? Did working as a sole trader work out well for you in the end? Looking to set up as one myself, so any advice or insight appreciated 😃

[CombatBarbie]

No point in going Ltd unless your earning the threshold. DH done it initially as we'd just bought a house but was setting up his own business with van, tools etc. 2 yrs in the accountant said revert to sole trader as there was no debt on the business.