Sole trader or limited company: which is better for your small business marketing strategy?

Entrepreneur working as sole trader

When I first turned self-employed, I barely gave a second thought to the name I was trading under, let alone whether I should be marketing my business as a sole trader or limited company.

It seemed obvious: I’m called Matt Ayres, so I’ll sell my freelance copywriting services as Matt Ayres. It’s been my name for my whole life! Why change it now?

But a few months in, I met freelancers and entrepreneurs in a similar position to me who weren’t operating under their personal names. Many were trading as limited companies, and had adopted an entirely different business marketing strategy than mine. They’d come up with fancy-pants brand names for their companies – titles that seemed to give them extra prestige and authority in their chosen fields.

I started doubting myself. How was lil’ old Matt Ayres – a freelance copywriter in Cardiff, Wales – going to compete with global-sounding brands like ‘Ingenious Marketing Solutions’, ‘Bright Spark Content’, or whatever other hypothetical company names my peers had give their businesses?

For a long time I pondered changing my name to something more ‘professional-sounding’, and switching up my sole trader status to that of a limited company. Other than the tax benefits it could entail, marketing myself as a limited company could change the way that potential clients perceive me.

Being a limited company might give me a greater separation between my personal life and business life. There could also be the potential to grow my business by taking on staff – more people working on my business means bigger projects, loftier goals and the chance to expand my humble copywriting business into something altogether more ambitious.

So why am I still freelancing as a sole trader? After a lot of thought, I decided that trading as a limited company wouldn’t suit my style of working.

Being a sole trader keeps things nice and simple for me. As a one-man band, I don’t need shareholders, and the solopreneur approach gives me greater flexibility to make quick decisions and adapt to my clients’ needs.

Remaining a sole trader feels more honest, authentic and true to the clients I enjoy working with.

The responsibility of taking on staff doesn’t appeal to me at the moment: I’d rather offer each of my clients a personal service, collaborating with other talented freelancers when I need an extra pair of hands. 

As for work-life balance, my freelance lifestyle means that my business is closely linked with other aspects of my schedule: social occasions, travel opportunities and the projects I work on in my spare time often relate to my work. Some people might hate this, but I actively enjoy it. Work doesn’t feel like work when your customers and colleagues are genuine friends; people you’d choose to spend time with outside office hours.

Perhaps most importantly for me as a marketer, remaining a sole trader feels more honest, authentic and true to the clients I enjoy working with. I don’t want to hide behind a name that isn’t really me. While the opportunity to come up with a whole new brand identity for my business is admittedly quite exciting, people already know me as Matt. Asking them to address me as anything different would feel unnatural – to me, at least.

There may be tax experts and accounting pros reading this who’ll tut at my lack of willingness to grow my business the ‘proper’ way. There are certainly benefits to trading as a limited company. And who knows – as my business changes and the way I work evolves, I may eventually decide that the structure of a limited company suits me better.

For now at least, I believe that operating and marketing myself as a sole trader makes the most sense. It affords me flexibility, simplicity and the chance to be seen as a friendly face instead of a faceless entity. The clients I enjoy working with tend to prefer hiring humans to companies, anyway.

If you’re experiencing a similar conundrum, don’t fret: I’ve drawn up a couple of quick and easy ‘sole trader vs limited company’ pros and cons lists. I hope that these help you to decide whether the sole trader or limited company model is the right fit for your business’ marketing strategy. (A small disclaimer: I’m not an expert in the legal or financial implications of different company structures, so these lists should only be used as a rough guide.)

Should you run your small business as a sole trader? Advantages and disadvantages

Sole trader with laptop remote working

Pros:

Greater control and flexibility over how you run your business

Simpler than running a limited company

Low operational costs and less need for professional advice

Easy to upgrade to a limited company if/when it’s necessary

Clients view you as a relatable human offering a personal service

Cons: 

Personal liability – business’ debts become personal debts

Some clients prefer to work with limited companies

Work-life balance needs appropriate management

Access to finance is often limited for sole traders

Not suited for people who want to co-own their business 


Should you run your small business as a limited company? Advantages and disadvantages

Small team working for a limited company

Pros:

Personal liability is less of an issue for owners of limited companies

Often considered more professional and prestigious than sole traders

Some clients prefer to work exclusively with limited companies

Easier to raise finance from banks and investors

Good for people who don’t want to run their business alone

Cons:

Must pay a registration fee to be incorporated at Companies House

More paperwork and accounts management than sole traders

Stricter record keeping requirements

Company name is subject to restrictions

Less personal service than sole traders from a marketing perspective