ltd company vs sole trader

Hi

I'm setting up a wedding photography business. On advice it seems becoming a sole trader is the way forward.

Unfortunately in an over enthusiastic rush I've register the business name at companies house as a limited company. Someone has said this doesn't matter and I can still trade as a sole trader but I now have the name if it need it later on. Other people have suggested that I now am a limited company and can't be a sole trader.

Does this matter and if so what do I need to do to be a sole trader?
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Comments

  • HappyMJ
    HappyMJ Posts: 21,115
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    I'd prefer to be a limited company any day. Now that you have a limited company get insurance for the company. Professional Imdemnity would be a good one in your line of business. If the photo's don't turn out as the client expects you could be sued for not only a refund of the work done but damages caused. If you traded as a sole trader you would personally be liable but if you trade through a limited company then the company is liable. If it is successfully sued when it runs of assets it can be dissolved....and you can start up a new company and continue trading.

    If you want to be a sole trader then simply just register with the HMRC as self employed.

    As a director and an employee of a company you don't need to register as self employed as technically you aren't.
    :footie:
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  • gb12345
    gb12345 Posts: 3,055 Forumite
    jbartlam wrote: »
    Other people have suggested that I now am a limited company and can't be a sole trader.

    Does this matter and if so what do I need to do to be a sole trader?

    You are not a limited company - you are a shareholder and director of a limited company (there is a big difference - the ltd company is its own entity).

    Just because the ltd company exists it doesn't have to trade and there is nothing to stop you from trading as a sole trader.

    Now that the company exists, you will have to make sure that you comply with all the requirements for annual returns etc

    You are probably best off speaking to an accountant if you haven't already.

    And as HappyMJ says - get professional indemnity insurance.
  • Mistral001
    Mistral001 Posts: 5,346
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    I would see an accountant. If you are trading under exactly the same name as the LTd Co (apart from the "Ltd." at the end of the name) then it could be confusing to anybody who wants to check the financial history of your business (commercial clients, suppliers you want an account with, bad debtors, etc. They will see you trading and yet your company under (almost) exactly the same name is making no money according to the accounts you lodge with Companies House.
  • Wywth
    Wywth Posts: 5,079 Forumite
    Mistral001 wrote: »
    I would see an accountant. If you are trading under exactly the same name as the LTd Co (apart from the "Ltd." at the end of the name) then it could be confusing to anybody who wants to check the financial history of your business (commercial clients, suppliers you want an account with, bad debtors, etc. They will see you trading and yet your company under (almost) exactly the same name is making no money according to the accounts you lodge with Companies House.

    Nothing wrong with that. Martin did exactly that with this site.

    Initially he started running this site via a limited company, then he ditched the limited company and ran it on a sole trader basis (you don't need to openly publish accounts that way ;)), and now he has sold this site for a reported £87million, it is now running as a limited company again (new registration, the former limited company using that name having since changed it's name)
  • antrobus
    antrobus Posts: 17,386 Forumite
    jbartlam wrote: »
    ....Unfortunately in an over enthusiastic rush I've register the business name at companies house as a limited company. Someone has said this doesn't matter and I can still trade as a sole trader but I now have the name if it need it later on. Other people have suggested that I now am a limited company and can't be a sole trader. ...

    The "someone" is correct and the "other people" are complete idiots. It is not unknown for individuals trading as 'Brand name X' to go to the trouble of specifically setting up a company under the name 'Brand name X Limited' purely in order to protect the 'Brand Name'. There are probably thousands of dormant limited companies out there that exist simply for that purpose.
  • Mistral001
    Mistral001 Posts: 5,346
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    Wywth wrote: »
    Nothing wrong with that. Martin did exactly that with this site.

    Initially he started running this site via a limited company, then he ditched the limited company and ran it on a sole trader basis (you don't need to openly publish accounts that way ;)), and now he has sold this site for a reported £87million, it is now running as a limited company again (new registration, the former limited company using that name having since changed it's name)

    Interesting.
  • Wywth wrote: »
    Nothing wrong with that. Martin did exactly that with this site.

    Initially he started running this site via a limited company, then he ditched the limited company and ran it on a sole trader basis (you don't need to openly publish accounts that way ;)), and now he has sold this site for a reported £87million, it is now running as a limited company again (new registration, the former limited company using that name having since changed it's name)

    He didnt ditch the company and run it as a sole trader, he ran it as an unlimited company. It isnt done often because you dont get the full benefits of a limited company but you do get most of its headaches.

    As others have said, the choice is yours but on all "legal" documents if you are a sole trader you must declare your personal name (ie Trading Name t/a Your Name) which is what eliminates the confusion between your sole trader activities and your limited company.
  • Mistral001
    Mistral001 Posts: 5,346
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    edited 27 February 2013 at 3:09PM
    He didnt ditch the company and run it as a sole trader, he ran it as an unlimited company. It isnt done often because you dont get the full benefits of a limited company but you do get most of its headaches.

    Does an unlimited company have to lodge annual accounts with Companies House for disclosure to public?
  • Mistral001 wrote: »
    Does an unlimited company have to lodge annual accounts with Companies House for disclosure to public?
    I dont know if they have to file accounts or not but if they do they arent public record (unlike a Limited company) which is the supposed reason for MSE becoming unlimited

    Edit: actually see http://www.companieshouse.gov.uk/about/gbhtml/gp2.shtml#ch5
  • Mistral001
    Mistral001 Posts: 5,346
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    edited 27 February 2013 at 3:41PM
    I dont know if they have to file accounts or not but if they do they arent public record (unlike a Limited company) which is the supposed reason for MSE becoming unlimited

    Edit: actually see http://www.companieshouse.gov.uk/about/gbhtml/gp2.shtml#ch5

    Edit: There might be reasons for going from Ltd to unlimited other than those of not having to file accounts for public record in this particular case we have to say though.
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