I started earning around £4,500 a months as a sole trader. Should I stay self employed or create a l…

There is no single turnover figure at which everyone should automatically move to a limited company. The right structure depends on your profit, personal circumstances, how much money you need to withdraw, whether you plan to employ people, your industry and your future plans.

As a sole trader, your business profit is generally taxed as your personal income. A limited company is a separate legal entity and has different accounting, Corporation Tax and Companies House obligations.

Before changing structure, we would normally compare the expected tax position and the additional administration involved. A limited company can sometimes make sense for a growing business, but incorporating purely because somebody said “you’ll save tax” can create unnecessary costs and complexity.