This issue's Community Spotlight is with a self-employed tradesperson who moved from sole trader to limited company two years ago, and has strong opinions about whether it was the right call.
On why he made the switch
"Honestly, half of it was tax, and I'll be upfront about that. The other half was that a couple of bigger clients only wanted to deal with limited companies. That second reason mattered more than I expected going in."
On what actually pushed him to finally do it
"I'd been putting it off for about a year, if I'm honest. It felt like a big, official step. What actually pushed me was losing out on a decent-sized job because the company doing the hiring said they only worked with limited companies for insurance reasons. That was the moment it stopped being theoretical."
On what surprised him
"The admin went up more than I thought it would. Filing accounts, a different way of paying myself, more to think about generally. Nobody really tells you that bit — everyone talks about the tax benefit and skips the extra admin that comes with it."
"I also didn't expect how different it would feel psychologically. Suddenly there's a company, separate from me, with its own bank account and its own accounts to file. It sounds small but it changed how I thought about the business — more like I was running something, rather than just doing a job for myself."
"It wasn't the tax saving that made it worth it in the end. It was that clients I actually wanted to work with started taking me more seriously the moment I had 'Ltd' after my name."
On the cost of getting it wrong
"I'll admit I didn't shop around enough for an accountant at the start, and the first one I used didn't really explain things to me — I was paying myself in a way that wasn't especially tax-efficient for about eight months before a different accountant pointed it out. That was an expensive lesson. If I'd asked more questions upfront I'd have saved myself a fair bit."
On whether he'd recommend it
"Not automatically, and not for everyone. If you're just starting out and it's still small, sole trader is genuinely simpler and that's not nothing. I'd say look at it properly once you're turning down work you'd want, or once the tax difference on paper actually adds up to something real — not just because it sounds like the grown-up thing to do."
On what he'd do differently
"Get a proper accountant sorted before making the switch, not after. I did it backwards — set the company up and then went looking for someone to help me run it properly. Should've been the other way round."
Thinking about the same move? It's exactly the kind of question worth asking the community before you ask an invoice.
