Comparison guide
Limited Company vs Sole Trader
A limited company is a separate legal entity with Companies House filing duties. A sole trader is personally responsible for the business and normally reports profits through Self Assessment.
Reviewed 18 July 2026 · Sources checked: Companies House, HMRC, Self Assessment
| Factor | Limited company | Sole trader |
|---|---|---|
| Public filing | Usually files confirmation statements and accounts with Companies House. | Does not file company accounts or confirmation statements. |
| Tax administration | Usually deals with Corporation Tax and director Self Assessment where relevant. | Usually reports business profits through Self Assessment. |
| Record keeping | Company records and accounting records need to support filings. | Business records need to support Self Assessment figures. |
Limited company may fit when
- - You want a company structure and understand the extra filing duties.
- - You are comfortable keeping company and personal finances separate.
Sole trader may fit when
- - You want simpler setup and administration at the start.
- - You understand that you are personally responsible for the business.
Common misconceptions
- - A company is not automatically better for every owner.
- - A sole trader can still have tax, VAT or PAYE duties depending on the business.