A frequent question when you’ve recommended to someone that a limited company is the route you’d advocate for them is “can I just check how much those fees would be if I worked as a sole trader instead?”.
That’s a totally understandable question, but actually should not rationally be part of the decision-making process. A conscientious adviser will already have taken that into account when giving the advice! They wouldn’t simply ignore a significant cost.
A literal answer to that question might be something like “If you were a sole trader, those fees would be £1,000 a year lower”. But that’s totally unhelpful as an answer, because the tax liabilities of a typical sole trader are going to be greater than those of a company and its owner, by at least as much, so someone with annual revenue of, say, £50,000 is going to end up in pretty much the same position either way when you take taxes AND fees into account.
You can only sensibly compare that total bundle of “all taxes plus professional fees’ down each route, not just a single component. Otherwise it’d be like deciding to work as a sole trader to avoid having to pay corporation tax, without considering that you’ll have to pay income tax and National Insurance! All of the costs and benefits need to be considered - and as tax rates stand at the moment, the relative professional fees for those two routes aren’t relevant to the decision for anyone who understands how the pieces fit together.
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