Originally written by Timothy Adler on Small Business
Do I need to register a company name if I am a sole trader?
You don’t need to register a company name if you are a sole trader. However, you should register with HMRC to let them know they should expect an annual self-assessment tax return from you.
7 benefits of registering a company name vs. sole trader
#1 – Pay lower tax
One of the biggest advantages of registering a company name is that running your business as a limited company can help you to legitimately pay less personal tax than being a sole trader.
Limited company profits are subject to UK corporation tax, which is currently set at 19 per cent compared to personal tax rates of 20pc-45%.
If you are the director and shareholder of a limited company, you may choose to take a small salary and draw most of your income from the business in the form of dividends. This reduces the amount of national insurance contributions (NICs) you pay, because company dividends are not subject to NICs.
#2 – Limited liability
Because a limited company is a separate entity to you, the owner, you have “limited liability”. What this means is that you are not responsible