Sole Trader v Limited Company

The PHAFitness Education Centre

Check out this article that explains sole-trader Vs limited company!

By Paul H

Starting your own fitness business and making the step to working for yourself can be an exciting yet daunting experience. One of your first decisions will be to decide whether to run your business as a sole-trader or a limited company, but what exactly is the difference?

There’s no one-size-fits-all solution and deciding the best business structure to use should be based on your own personal circumstances and where you see the business in the future. Below is a guide showing the similarities and differences between the two options, giving you a clearer picture of what can be expected with each one.

What is a sole trader?

Means that you are the business. You can hire staff, but your business is owned and controlled by just one person; you!!

You and your business are seen as the same which means you are personally liable for any losses or debts that your business makes.


  • As the sole owner, you can keep all of your business’ profits
  • Quick and simple to set up
  • You can register a name to trade under that is different to your own


  • You are fully liable for any loss your business makes, so you may have to use your own money to repay any debts
  • There’s no one to share accountability with. Whilst you can hire staff, any and all important business decisions fall to you
  • Less opportunity to control the amount of tax that you pay on your profits

What is a limited company?

This means you will be setting up a separate entity to run your business. Your business will have its own legal identity separate to yours and its finances will be kept separate from your personal finances. As director of your limited company, this means you will have limited liability on any losses or debts incurred by the business.


  • All shareholders have a limited liability should your business incur losses or debt, it’s not your personal responsibility (unless in exceptional circumstances e.g. fraudulent trading)
  • Growth can be achieved from selling shares in your business, allowing others to invest in and hopefully gain a reward in your business journey
  • Should you ever wish to leave or divest your business, there are more opportunities for a clean break from a limited company than other business structures


  • There will be more compliance and tax requirements running a limited company as opposed to operating as a sole trader, but with PHAFitness we can look after all this for you

Our Team

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