If you’re starting a business, or already trading, you’ve probably wondered at some point whether you should stick with a sole trader setup or move to a limited company.
There’s no one right answer. It depends on your income, how you operate, and what you want down the line. Here’s a simple breakdown of the pros and cons, and the kind of questions we’d usually ask a client before giving advice on it.
Sole Trader — Simple and Straightforward
Sole trader means you’re trading under your own name (or a business name) and you’re taxed as an individual.
Pros:
- Quick to set up — register with Revenue for taxes (and the business name with the CRO if applicable)
- Less paperwork and lower ongoing costs
- You keep full control, and funds are yours to use
Cons:
- You’re personally liable as there is no legal separation between you and the business
- Tax on profits is at your full income tax rate (plus USC + PRSI), which can add up
- May not be suitable for your business/client base
Limited Company — Bit More Work, Bit More Flexibility
A limited company is a separate legal entity — you’re a director or shareholder, not the business itself.
Pros:
- You only pay 12.5% Corporation Tax on profits kept in the company and you have more investment flexibility
- Some protection as you are not personally liable for company debts (unless you sign something personally)
- Looks more established — sometimes necessary for tenders, contracts, or investors
Cons:
- More administrative requirements such as CRO filings, accounts, payroll, etc.
- You’ll need to be a bit more organised — company funds ≠ personal funds
- Slightly higher accountancy fees (but manageable)
So, What’s Best?
Here’s how we usually break it down with clients:
| If this sounds like you… | …then this might suit: |
| You’re just getting started or testing an idea | Sole trader – simple and flexible |
| You want to reinvest profits or maximise wealth growth | Kimited company – tax efficient |
| You want to take on staff or a business partner | Limited company – cleaner setup |
| You’re in a higher-risk industry (e.g. construction, consulting) | Limited company – protects you legally |
| You’re self-employed and want to keep it lean and low-maintenance | Sole trader – fewer moving parts |
Final Thought
Some people start as sole traders and stay that way for years. Others switch to a company as things grow. There’s no rush, but it’s worth getting proper advice early, especially before profits start to climb or you take on extra commitments.
At HTH Accountants, we help clients weigh it up properly, run the numbers, and get everything set up the right way if a switch makes sense.
Not sure which structure fits your situation?
Please feel free to contact us, we are happy to talk.
