Legal Entity Question - Sole Trader or Private ltd Company for FBA?
Hello,
Just to ask which is preferable and why?
UK Sole Trader or UK Private ltd Company for FBA?
Thank you,
Berto
23 replies
Seller_7VbclcPFFRTnc
That depends on your own personal circumstances and should be asking your accountant
I believe however you already set up a ltd
Have you looked a the differences and responsibilities on the HMRC website?
Seller_lljyzgTxr5fgI
It’s about which is preferrable to you and why. At the end of the day, a lot of people will tell you it isn’t worth being a limited company below a profit level of £50K. However, we have been a limited company for years and have never made that level of profit…or even attempted to. What are probably the more important questions are, a) do you have staff to pay? and b) if not, how do you intend to pay yourself (ie full salary or small salary and dividend). We do the latter.
For the purposes of FBA, it doesn’t matter if you are a sole trader, partnership or limited company.
Seller_esvgLzKXw2YAl
The simplest and most basic differences are:
Sole Trader, is easy to setup. Lower accountancy costs. Lower tax costs, till you hit about 50k in profit.
Ltd Company, has limited liability. More expensive accountancy costs. Lower tax costs above about 50k in profit. More legal obligations.
But you really need to speak to an accountant about it. It does very much depend on your circumstances. And certainly shouldn’t be something entered into lightly.
Seller_iQX7bNhAg6y1q
Thanks to everyone for the very helpful responses. 
Seller_ae51e0CJoHqCX
Not sure why there would be a connection between FBA and LTD, they are mutually exclusive.
You need to decide whether you want to trade as a sole trader or company. You need to decide if you are doing FBA, FBM or both.
A lot of people starting out do get a little bit too hung up on whether to be limited or sole trader. Your decision is how you want to view your business and see it in the future. There is also probably less hassle going from a sole trader to a limited company than trying to revert from limited to sole trader. Many make a decision early on because if you change your mind or do it later, it feels like you are starting again.
The change is quite often the thing that is a pain later on down the line. I could sit here and debate all day about the benefits and disadvantages of each but the bottom line, you become accustomed to the way you work.
As a sole trader I would always feel like I am working for myself and earning a living from that work, As a limited company, I feel more like an employee and basically working my way towards a pension. This is just my personal reason for being limited, it has nothing to do with tax benefits, professionalism, declarations, Accountants preferences, it is just me feeling at ease with it.
My accountants seem to do a bit more work and post a lot of stuff that I don’t really pay a lot of attention to but I like it that way. Getting a decent knowledgeable accountant is worth its weight in gold.
