Sole trader or limited company?

The short answer

You can start as a sole trader. You and the business are the same person in law, there is nothing to register with Companies House, and you are not required to have an accountant.

A limited company is worth looking at later, once income is steady. This is general information for the UK, not advice. Check gov.uk or ask a professional for your own case.

What a sole trader has to do

Keep a simple record of money in and money out, with receipts. A spreadsheet is enough.

Tell HMRC and file a Self Assessment tax return if your trading income goes over £1,000 in a tax year. Under that amount the trading allowance may cover you. Check the current rules on gov.uk.

A separate bank account is not required but makes the records much easier.

Universal Credit

Self-employed income affects Universal Credit. Tell your work coach before you start trading and report your earnings as they ask.

There are special rules for the first months of a new business. Ask your work coach what applies to you, because the rules change.

What a limited company adds

A company is a separate legal body. That can limit what you personally owe, but it brings more admin: annual accounts, a Corporation Tax return, a confirmation statement and payroll if you pay yourself a salary. Most people pay an accountant to handle this.

The practical protection at the start is usually insurance, such as public liability, not a company.

When to look into a company

Wait until all three are true: three months of steady income, you can afford an accountant every month, and customers or the work genuinely need a company. The home page has a card that tracks these.