Sole trader or limited company calculator

How to use the sole trader vs limited company tax calculator?

This corporation tax calculator can evaluate your take-home income if you're a sole trader or a limited company. Enter your annual revenue, excluding VAT and other expenses. Under both instances, the calculator will evaluate your expected take-home income.

What is the difference between a sole trader and a limited company?

There may just be one owner, but having multiple owners and shareholders is also possible. Another key difference is how you get paid and what tax you pay. A sole trader pays income tax on all their business profits. If you have a particularly successful year, you’ll pay more tax. A limited company has more flexibility.

Should you switch from a sole trader to a limited company?

There could indeed be some tax savings to be made by making the switch from a sole trader to a limited company. While sole traders pay Income Tax on profits and classes 2 and 4 National Insurance, limited companies pay Corporation Tax on profits, which is a lower rate than Income Tax, and no National Insurance.

How does the company vs sole trader calculator work?

Enter your annual turnover (excluding VAT and expenses). The company vs sole trader calculator will estimate your take-home income for both scenarios, assuming eligibility for Personal Allowance and tax-efficient salaries from your company. I agree to the Terms and conditions and Privacy policy. I agree to receive emails from 123Financials.

When should a sole trader become a limited company?

Sole traders may consider becoming a limited company when their income and profits increase, and they seek to limit personal liability, gain credibility, and benefit from tax advantages available to limited companies. Why choose Ltd over sole trader?

How much tax can a sole trader save a year?

GoSimpleTax calculates that for someone with profits of £15,000 a year, it is more tax efficient to be a sole trader – with an annual saving of around £150. However, once you earn more than £20,000 per annum, it calculates that setting up a limited company will save you money.