The bulk of the UK’s self-employed operate as sole traders; this legal structure is the choice of many because of its simplicity. As it’s easy to set up and brings relatively few legal responsibilities, working as a sole trader suits many aspiring and established businesses.

On the flip side, sole traders face unlimited liability, meaning that there’s no legal distinction between them and their business. In other words, should they mount up big business debts they’ll be left personally liable - a worrying prospect for anyone taking substantial financial risks.

Elsewhere, sole traders aren’t always tax efficient and, depending on your circumstances, setting up a limited company could be a better option. What’s more, limited companies also offer limited liability, meaning that there is a legal distinction between you and your business.

It’s always best to speak to an accountant first, as there are other things to consider before taking the plunge - going limited brings more paperwork for one. Nonetheless, if it still sounds interesting, here’s our guide to setting up a limited company…

In contrast to sole traders, no two limited companies are allowed to share the same moniker. So you’ll need to come up with something fresh from the outset. Perhaps take a look at our article about the UK’s best business pun names for some off-the-wall inspiration, but bear in mind that your business’s title will need to meet strict criteria.

Perhaps double-check your name’s availability online too, through a domain checker. 

Every limited company requires at least one director, but they can have more if they like. In fact, there’s no official limit on the amount of directors a limited company can appoint.

When setting up a limited company, the director must be 16 or over and their responsibilities will range from legal to financial. As stated on Gov.uk website, as a director you must:

Once you’ve settled on your name and decided on your directors, you’ll be in a position to incorporate your new limited company.

All in all the process of setting up a limited company can be done pretty quickly. Do bear in mind your extra responsibilities though, and speak to an accountant if you’ve got any questions. Their expertise can be invaluable in guiding you as to whether starting a limited company is right for you.