Why Being a Sole Trader Works for Many Creatives in the UK

If you’re making money from your music, art, or content, you’ve probably wondered whether to stay a sole trader or set up a limited company. While there are benefits to going Ltd, a lot of creatives choose to stay as sole traders—and for good reason.

Being a sole trader means you and your business are legally the same, and while that might sound risky, it actually comes with some major perks, especially if you’re just starting out or prefer keeping things simple.

1. Easy Setup, No Paperwork Headaches

Setting up as a sole trader is quick, easy, and free. All you need to do is register with HMRC for self-assessment. There are no company formation costs, no complicated legal structures, and no extra admin beyond filing your annual tax return.

If you go Limited, you’d have to file company accounts, submit a Confirmation Statement, and deal with more HMRC rules. As a sole trader, your financial life is much simpler, meaning less time on paperwork and more time creating.

2. Full Control Over Your Money

As a sole trader, everything you earn is yours to keep (after tax, of course). There’s no need to figure out salaries, dividends, or business bank accounts. You get paid directly, and you decide how and when to spend your money.

With a limited company, you’d have to think about corporation tax, payroll, and dividend rules—which can get complicated.

3. Fewer Costs and No Surprise Fees

Running a limited company comes with extra costs—such as paying an accountant, filing company accounts, and potential business insurance requirements. As a sole trader, your only financial obligation is to pay your taxes on time and keep basic financial records.

For creatives who don’t want extra expenses or accountancy fees, staying as a sole trader can be a more cost-effective option.

4. No Need to Register for VAT (Unless You Want To)

If you earn under £90,000 per year, you don’t need to register for VAT. This means you can charge clients a flat rate without adding an extra 20% VAT fee, making your services more affordable.

With a limited company, VAT rules can get trickier, especially if you deal with larger clients who expect VAT invoices. As a sole trader, you avoid this complexity unless you choose to register voluntarily.

5. Great for Low or Unpredictable Income

Freelance work is up and down, especially in creative industries. Some months are great, others… not so much. As a sole trader, you only pay tax on what you actually earn, which makes things much easier when your income fluctuates.

If you run a limited company, you still have to file accounts and manage tax admin, even if you don’t make much in a given year.

6. More Privacy, Less Public Scrutiny

When you run a limited company, your financial accounts are publicly available on Companies House, meaning anyone can look up your company’s earnings and records.

As a sole trader, your finances remain private—no one needs to see how much you’re making except you and HMRC.

7. Easier to Change Later

Going Ltd is a big step, and while you can always switch from sole trader to a limited company later, doing it the other way around is more complicated. If you’re unsure about which route to take, starting as a sole trader is the safest option.

When is Sole Trader NOT the Best Choice?

Being a sole trader works for many creatives, but there are a few cases where going Limited might be better:

• If your income is consistently above £30,000–£50,000, a limited company may help you pay less tax.

• If you work with bigger clients or corporate brands, they may prefer to work with a registered company.

• If you want to protect your personal assets, since sole traders are personally liable for any business debts.

Final Thoughts: Should You Stay Sole or Go Ltd?

If you’re just starting out, earning less than £30K per year, or want to keep things simple and flexible, being a sole trader is often the best choice. You avoid unnecessary admin, keep full control over your money, and don’t have to deal with VAT or corporate tax rules.

But if you’re growing fast, earning a high income, or working with corporate clients, it might be time to consider going Limited.

The good news? You can always switch later. For now, focus on your craft and make the best choice for where you are right now.

If you're ever in need of help with setting up a limited company, sorting out your bookkeeping, accounting and tax submissions or would like some personal financial coaching, drop us a line by clicking on the 'Contact Us' button at the top of the page and we'll be happy to help.

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