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  • Writer's pictureTracy Irvine

Difference between Limited Company and Self Employed

This is a question which I have been asked several times recently. There are advantages and advantages to both, so here is some of the most common answers between the two

Self Employed

*Easy to set up, you need to register with HMRC for self Assessment

*Taxed Profits, @20% and 40% for higher earnings

*You are liable for all debts of the business, which could mean if the worst happens your personal Assets could be at risk

*Can take money out of the business freely for personal spending

*Complete a Self Assessment Tax Return Every Year

*Accounts easier to maintain

Limited Company

*Separate Entity, your personal assets are safe

*Tax rate on Profit 19% (Paid by Company)

*Set up a Limited Company with Companies House, which means your details will be publicly available

*Cannot take money from the business freely, usually paid through PAYE and dividends from the Profits

*Can be easier to get funding

*Complete Annual Accounts to Companies House and a Corporation Tax Return to HMRC every 12 months

*Bookkeeper/Accountant recommended more complex account management

These are the main points which are often asked, if you have any particular questions regarding either I am quite happy to answer them.

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