Choice of business vehicle: Trades

1. Ltd company v sole trade

1.1. Advantages

1.1.1. Lower rate of tax on profits

1.1.2. Access to tax reliefs

1.1.3. Access to funding

1.1.4. Limited liability

1.2. Disadvantages

1.2.1. More paperwork

1.2.2. Two layers of tax

1.2.3. Directors' responsibilities

2. Limited company

2.1. Limited liability

2.2. Corporation tax on profits

2.3. Income tax/NICs when profits extracted

2.4. Losses used within company

2.5. Admin.

2.5.1. File accounts and tax return

3. Sole trader

3.1. Unlimited liability

3.2. Income tax and Class 4 NICs on profits

3.2.1. Payments on account

3.3. Relief for losses

3.3.1. Enhanced in opening years

3.4. Admin.

3.4.1. Register with HMRC

3.4.1.1. Submit tax returns

4. Partnership

4.1. Partners are jointly liable

4.2. Pay tax on same basis as sole trader

4.3. Relief for losses as for sole trader

4.3.1. Anti-avoidance rules

4.4. Admin.

4.4.1. As sole trader + partnership's tax return

5. Limited Liability Partnership

5.1. Limited liability

5.2. Pay tax on same basis as sole trader

5.3. Relief for losses as for sole trader

5.3.1. Restrictions apply

5.4. Admin.

5.4.1. As partnership + file accounts