You could be on your own running a plumbing business, or a team of 100 members operating a huge recruiting firm, but most times, you’re likely to share identical goals.
Being a sole trader, there’s hardly any legal separation from your business and you so most probably you won’t trust somebody else to use your name as you do.
The idea of having all the control in your own hand may seem exciting for some, particularly as they’ll be able to manage the business as per their liking which could work well for a short period. However, as your business grows bigger and bigger, you would be required to take some tough decisions on your way.
When it comes to a limited firm, the management will most likely stay away from ownership. These means that the company shareholders will most likely maintain all the ownership. At the start, this will the same individuals but the fact is, it doesn’t have to be that way. Obviously, having shareholders is beneficial as well. For instance, you can use them to raise the capital whenever your company requires it
Shareholders might not be available with a partnership or sole trader. You can offer them a percentage of your company’s profits, or even make them your business partner; but, there might hardly be any profits to share with. Also, a partner will most likely come with additional responsibility. On contrary, shares tend to increase even in case there are little to no profits. Thus, they’re likely to continue to attract the investors.
Potential for Growth
Growth is a significant factor for every business. Limited firms often tend to grow much rapidly. You can use them to attract members with adequate knowledge as well as experience in your staff. On the other hand, this might not be the case with sole traders.
Setting up a limited company may not suit every person, however, it can most likely be an option you can consider. In case you are still not sure of which option to choose – don’t stress. You can ask others who’ve been in a similar situation before, or an accountant or a business advisor. You will also need to consider a few additional things like the tax rules.