Disincorporation pros and cons: limited company versus sole trader

Stephen Relf ACA CTA examines the pros and cons of setting up a limited company versus operating as a sole trader, and assesses the critical tax compliance issues when planning a disincorporation

The business owner may choose to carry on their business through one of a variety of different vehicles; for example, as a sole trader or through a limited company. They make this choice in the early days of the business and are free to change their mind at any point thereafter. Where the business is transferred from an unincorporated structure - a sole trader or partnership - to a company, reliefs are available to ensure that this can be done in a tax neutral manner.

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