IN THIS CHAPTER WE ARE GOING TO RETURN TO THE two most common choices of business types – sole traders and limited companies – and look at the tax implications of each.
Before we separate the two, let’s look at the common ground: you can use your personal allowance, you can register for VAT, you can employ people including family members and you can recover pre-start costs.
Now the differences.
Tax and the sole trader
Let’s look at an example of the tax position for a sole trader. Using a simple P&L described earlier, let’s say you make £30,000 sales in the first trading period of your business. Let’s also say ...