The owner of a limited company and a sole trader both run small businesses. However there are many differences between the two.
Limited Liability
Sole Trader
Shares
Liability
Team Work
Simplicity
More Help
No Staff
Trust
Less Rules
Security
Risk
At A Glance Table
| wdt_ID | Type of business | No. Involved in ownership | Sources of finance | Liability for debts | Profits distribution | Authority and control |
|---|---|---|---|---|---|---|
| 1 | Sole Trader | 1 | Bank loans (finance and credit) and personal savings. | Owner is fully liable for all debts incurred. | Owner keeps all profits. | Full control by proprietor. |
| 2 | Partnership | 2 to 20 | Bank loans (finance and credit) and personal savings. | At least one partner is fully liable for all debts. | Profits shared according to deed of partnership | All partners have equal power. |
| 3 | Private Limited Company | 2 or + | All the above plus the issue of shares to agreed members. | Limited liability for debts; each shareholder only risks the amount put in to buy shares. | Distributed between all shareholders - dividends being paid per share. | Normally directed by shareholders (in proportion to the number of share held). |
| 4 | Public Limited Company | 2 or + | All the above but the ownership of shares is open to all via the Stock Exchange. | As for private limited company but annual general report must be available to the public and accounts publicised in the national press (a minimum amount of share capital is another prerequisite). | As for private limited company but annual general report must be available to the public and accounts publicised in the national press (a minimum amount of share capital is another prerequisite). | Shareholders appoint a board of directors to act on their behalf (these directors are voted in/out at the AGM). |
Quick Comparison Table
What are the advantages of being a Sole Trader?
A sole trader has to do a lot less paperwork than a limited company
A sole trader is not as heavily regulated as a limited company
A Sole trader’s information is not made public at Companies House
A Sole trader can run their business how they like and keep the profit.
There are no board members or shareholders to interfere
| wdt_ID | Benefits | Limited Company | Sole Trader |
|---|---|---|---|
| 1 | Be your own boss |  |
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| 2 | Quick and easy setup process | |
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| 3 | Work with a variety of clients | |
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| 4 | Incorporate a company | |
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| 5 | Pay yourself a combination of salary or dividends | |
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| 6 | Pay corporation tax | |
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| 7 | Benefit from limited liability | |
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| 8 | Work with majority of recruitment agencies to source assignments | |
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ECAD Partners
The Best For the Job
Researched and recommended by ECAD we have complied a list of Partners who can help provide essential Business Services at competitive prices.
Address
1234 Oxford St
Manchester M1 2FG
Phone
0161 234-5675
info@companyregistration.com
Address
1234 Oxford St
Manchester M1 2FG
Phone
0161 234-5675
info@companyregistration.com