eAccounts Highlights the Benefits of Switching from Sole Trader to Limited Company

Providing Expert Advice on Company Structure and Tax Efficiency

United Kingdom, 17th Mar 2025 – eAccounts, the UK’s leading online accountancy firm, explains why sole traders should consider incorporating a limited company and how doing so can lead to lower tax bills, greater financial security, and enhanced business credibility. 

Why Are More Sole Traders Switching to Limited Companies? 

Many UK businesses start as sole traders due to the simplicity of setup and minimal administrative requirements. However, as businesses grow, the limitations of being self-employed become more apparent. More entrepreneurs are realising the benefits of switching to a limited company, a move that can provide financial advantages and increased protection. 

Kris Corbisiero, Co-Founder of eAccounts, explains: “Many sole traders don’t realise they could be paying more tax than necessary or putting their personal assets at risk. Operating as a limited company can be a game-changer in terms of tax efficiency and business credibility. Our role at eAccounts is to make the transition seamless, helping business owners navigate the process effortlessly.” 

The Key Benefits of Operating as a Limited Company 

eAccounts has helped thousands of sole traders make the switch to limited company status, offering expert guidance on company structure and tax efficiency. Here are the top reasons why incorporation could be the right move: 

1. Lower Tax Bills 

One of the biggest financial benefits of forming a limited company is the potential for tax savings. Sole traders pay Income Tax on their profits, which can be as high as 45% for higher earners, along with Class 4 National Insurance Contributions (NICs). In contrast, a limited company pays Corporation Tax at 19%, and directors can take advantage of a combination of salary and dividends to minimise their personal tax liability. 

2. Limited Liability Protection 

As a sole trader, you are personally responsible for all business debts. This means your personal assets, such as your home and savings, could be at risk if your business faces financial difficulties. A limited company is a separate legal entity, meaning the company—not you personally—is liable for its debts. This offers much-needed financial security. 

3. Greater Credibility and Professional Image 

Many clients, suppliers, and investors prefer dealing with a limited company rather than a sole trader. Having “Ltd” after your business name can enhance your professional reputation and make you appear more established, which can help you attract larger contracts and business opportunities. 

4. Easier Access to Funding and Investment 

Banks, lenders, and investors are often more willing to provide funding to limited companies than to sole traders. If you’re looking for a business loan or considering investment, incorporating your business could increase your chances of securing financial support. 

5. Greater Flexibility for Growth 

As a limited company, you can bring in shareholders, restructure ownership, and expand operations more easily than as a sole trader. If you plan to grow your business, incorporation provides a scalable structure. 

6. Improved Pension and Financial Planning Options 

Limited company directors can contribute to a director’s pension scheme, which allows them to save for retirement in a tax-efficient manner. This is not an option available to sole traders, making incorporation a smart move for long-term financial planning. 

How eAccounts Makes the Transition Easy 

Switching from a sole trader to a limited company may seem like a complex process, but eAccounts makes it simple. As specialists in online accounting for UK businesses, they handle every step of the transition, including: 

Company Formation – Registering your business with Companies House and setting up your legal structure. 

Tax Registration – Ensuring you are registered for Corporation Tax, PAYE, and VAT (if required). 

Xero Accounting Software Setup – As a Platinum Xero Partner, eAccounts helps business owners manage their finances effortlessly with real-time bookkeeping and reporting. 

Unlimited Support from Chartered Accountants – Clients get ongoing support and expert tax advice to ensure they maximise the benefits of incorporation. 

Kris adds: “Many business owners delay incorporation because they think it’s complicated, but with the right guidance, it can be a smooth process. At eAccounts, we provide all the support needed, from company setup to tax planning, so business owners can focus on growth.” 

Is It the Right Time to Switch? 

Not every business needs to incorporate immediately, but if you are: 

Earning over £30,000 annually as a sole trader, you could be paying more tax than necessary. 

Looking to protect your personal assets, limited company status offers financial security. 

Wanting to attract larger clients or investors, incorporation can improve your business’s credibility. 

Get Expert Advice on Incorporating Your Business 

At eAccounts, we make switching from a sole trader to a limited company easy and stress-free. With fixed-fee accounting, unlimited support, and expert tax guidance, we help business owners make the right financial decisions. 

To learn more about whether incorporating is the right move for your business, visit eAccounts or book a free consultation today.