Why register a LTD company over sole trader?

MyDymo

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Hello,

I see many people advocate going for a ltd company over being a sole-trader.

Even though it can be more complex going down this route, especially if you're an "online entrepreneur" dabling in many types of things (e.g freelance design, e-commerce product selling). Is it mainly for tax purposes?

If anyone can share their experience or reasoning, id be grateful.
 

koulde

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My very first company was "Individual Establishment" and I didn't mind it at all. Though I felt my lack of planning when I tried tendering for bigger projects and trying to apply for ISO accreditation. Individual Establishments or even SPCs are not that appealing when it comes to clients. So the moment I changed it to WLL (With Limited Liability) things were better. I don't know about the tax part but over here WLL protects you as a person (example: Legal issues with clients won't drag you name to court, only your company's name).
 

Sephrata

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Limited Liability = Creditors can only go after what you've put into the company (share capital) or the company's assets.

Freelancer/Sole trader = Your liability is unlimited, so creditors can go after your personal assets.

Say you start an e-commerce store selling children's toys and a child has an accident or dies as a result of using one of your toys. You could lose everything if were operating as a sole trader.
 
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