Similarly to Belgium, in the UK, freelancers have the choice between registering as a sole trader, registering a partnership, a limited partnership (LLP), or forming a limited company.
As a sole trader
, you are essentially a self-employed person who is the sole owner of a business. It is the simplest legal structure, and the most common. You can easily register as a sole trader via the gov.uk website.
Operating as a sole trader is relatively straightforward and you will not have to dedicate a huge amount of time on admin and paperwork. However, you lack much of the protection of a limited company, as your business is connected to you and you can suffer unlimited liability if things go wrong, including losing personal assets. You may also not have access to financial support.
is similar, as all parties are treated as self-employed and must share the costs and risks of running the business.
A limited company
is a legal structure separate from its owner(s), so you will own a company with a trademarked name which nobody else can use.
Since a limited company is a separate legal entity from the owner, their assets are protected in case of failure. Instead of income tax, limited companies pay corporate tax, which often comes with a kinder tax rate than on sole traders. They can also take advantage of many more allowances and tax-deductible costs, which can end up saving more money in the long term, depending on the nature of the expenses. Limited companies face much more scrutiny from the tax authorities though, and there are more responsibilities in running a limited company, such as filing an annual company tax return and annual accounts.
A limited partnership
is also a separate legal entity and the liability of the partners is limited to what they invest in the business. Just like a limited company, it must be registered with the Companies House and involves many administrative responsibilities.
Choosing between the different structures ultimately comes down to which is the right one for your business. While you can comfortably freelance long term as a sole trader (or a partnership), it is worth considering the benefits of a limited company (or LLP). Our advice would always be to consult with an accountant or a lawyer to make the best decision.
If you are a UK national moving out of the country to Belgium, please find out more here
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to continue running your freelance business across boarders.