"Should I go limited?" is one of the most common questions tradespeople ask us. There's no single right answer — it depends on how much you earn and what matters to you. Here's the honest breakdown.

Being a sole trader

This is the simplest way to work for yourself. You and the business are legally the same thing.

The upsides:

  • Easy and cheap to set up — just register with HMRC
  • Simple accounts and one annual tax return
  • You keep full control and all the profit

The downsides:

  • Unlimited liability — if the business owes money, your personal assets are on the line
  • Tax gets expensive as profits rise, since it's all income tax

Being a limited company

Here the business is a separate legal entity. You become a director and usually a shareholder.

The upsides:

  • Limited liability — your personal assets are protected if things go wrong
  • Often more tax-efficient at higher profit levels (a mix of salary and dividends)
  • Looks more established to larger clients and main contractors

The downsides:

  • More admin — annual accounts, Corporation Tax, Companies House filings
  • Higher accountancy costs
  • Your details and accounts are on the public record

💡 Rule of thumb: Many trades find that going limited starts to pay off once profits are consistently above roughly £30,000–£40,000 a year — but the liability protection alone can make it worth it sooner.

So which should you choose?

Stay a sole trader if you're starting out, earning modestly, and want to keep things simple.

Consider a limited company if your profits are growing, you want to protect your personal assets, or you're chasing bigger contracts that expect you to be a registered company.

Get advice before you switch

The maths is different for everyone, and switching at the wrong time can cost you. A quick conversation with an accountant will tell you whether it's worth it for your numbers — often in one short call.

Topics: Business Structure Limited Company Sole Traders