Limited Company vs Sole Trader. Which is better?

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What's better: Sole Trader or Limited Company (LTD)? Discover the differences in this video.

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TIMESTAMPS:
00:00 Sole Trader vs Limited Company
00:45 The Differences
04:00 Tax Implications
06:26 Protection and Privacy

🧡DISCLAIMERS & DISCLOSURES
This content is for educational and entertainment purposes only. Nischa does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.

This description contains affiliate links that allow you to find the items mentioned in this video and support the channel at no cost to you. Thank you for your support!

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[fredsmith]

Hi Nischa, I can vouch for everything in this video; very well presented. I started as a sole trader 16 years ago and formed my LTD company 12 years ago. Never needed to borrow money to grow, but being LTD company has definitely opened up opportunities with bigger corporate clients. Thanks for continuing to share good independent information.👏

[aitulegendvt]

I’m so grateful for you and the content you create for us Nischa. You’re not a gatekeeper and help to educate us on matters we don’t quite understand. Thank you and hope all is well

[Discombobulate]

The public record thing is what’s keeping me from registering as a ltd company. My father was an accountant for 45 years, and he said he had quite a few people having had their identities stolen through their details being on Companies House and part of public record.

[ReadySetStartUPUK]

Fantastic comparison between limited companies and sole traders! On Ready Set StartUP UK, our contestants have faced similar questions when deciding how to structure their businesses. This kind of clarity really helps in those early stages—especially when weighing up tax efficiency and liability concerns. Great content!

[danielkrcmar]

5:05 Why is your company paying Corp. Tax on revenue before it's paying you as an employee a monthly wage? Surely wages would count as a business expense and expenses are paid before tax?

Company pays you a wage before it pays tax > you the individual is then taxed on that income > business pays Corp. Tax after expenses > dividends are paid out of profits > you pay dividend tax depending on your tax bracket.

[willj]

Thank you very much, I was a sole trader for years, until I got ill. I never had this subject explained to me in a manner I could easily understand fully. Amazing 👏

[bajajmusic]

Good video, however you’ve missed one very important point. If you were to extract the profits from the LTD ie pay yourself a salary etc you end up paying double taxation. 25% corporation tax, followed by either tax on dividends or income tax. Therefore you end up paying significantly more especially if you’re a Higher Rate Tax Payer.

[veesvoyages]

Thanks for sharing this in such clear and concise ways that we can all understand, it's been super helpful!

[blakex]

Wow, you are almost at 1M with less than 100 videos 😊 you are so intellectual and eloquent, I have learned so much from watching your videos. Thank you😊

[BRIYONCE]

Thank you so much for making these things that seem complicated easier to understand.

[Trading-Lawyer]

Thank you for the insights, Nischa! Very helpful. If I may add that another key difference is insolvency/bankruptcy proceedings. In the case of a sole trader, several jurisdictions provide for the liquidation of personal assets, which is an aspect to consider before assuming big risks!

[igormatejski]

You're always pop up in the right time Nischa :) Meet you soon for the podcast!! :)

[steve]

What about employees and partnerships? How would that work? How can you pay employees if a sole trader or Ltd company? What is a partnership (it seems some businesses such as eBay don't seem to know what a partnership is).

[anatolianbites]

Hi Nischa! I enjoy your videos. Can you please make videos about stock exchange, investing in company shares etc..making money from money..where do we start? What do we need? Thank you!

[dankiburz]

She must be talking about UK law. Because in the US each state is different. In Florida we have C and S Corporations and LLC's. Delaware is the easiest for out of state companies to in incorporate.

[piecritic]

Id love to see you on the Diary of a CEO podcast

[carosm]

Thanks I’m actually going to be starting my own company and was thinking about this.

[yohannesgf]

Hi Nischa, commenting to show appreciation. Thank you, keep up the good work!

[Kuestech]

Awesome info great explanation there, it's not in super-super detail but it's breaked down pretty much very nicely which helps in better navigation; although consulting a professional advisior is always better to make more proper decisions!

[sadiethomson-ashworth]

Fantastic video, commenting to show appreciation and give back :) thank you - really solid advice.