When to consider a limited company
Sole trader status works well for many businesses, but growth can change the trade-offs.
As profits rise, you may want to compare structures for tax efficiency, liability protection, and long-term plans. The right point depends on your numbers and risk profile.
Moving to a company adds admin, compliance requirements, and potential accounting costs. The decision should be based on full-year projections, not one strong month.
Before switching, model both structures side by side and include salary, dividends, pension strategy, and admin overhead.
Key points
- Compare total annual outcomes, not headline tax rates.
- Include admin and compliance workload in the decision.
- Use professional advice before restructuring.