For Sole Traders Thinking About Going Limited
By Accounting Matters Ltd.
Introduction – The Conversations That Often Never Happen
At Accounting Matters, many new clients say the same thing during their first meeting with us:
“I’ve been with my accountant for years… but no one ever explained this to me.”
And usually, they’re not talking about complicated tax legislation.
They’re talking about the basics — the things that actually shape their business decisions.
If you’re a sole trader thinking about moving to a limited company, there are certain conversations your accountant should be having with you long before you reach breaking point.
But in our experience, many don’t.
Not because they’re bad people — but because they’re reactive rather than proactive, compliance-focused rather than advisory, and comfortable doing things the same way year after year.
This blog is about the things we believe your accountant should be telling you if you’re a sole trader looking to go limited — and why hearing them early can save you money, stress, and regret.
1. “Going Limited Isn’t Just About Tax — It’s About Structure”
Many accountants frame incorporation as a simple tax decision:
“You’ll pay less tax as a limited company.”
That’s only half the story.
What they should be telling you is this:
Going limited is about changing how your business works — not just how it’s taxed.
When you become a limited company:
- the business becomes a separate legal entity
- you become a director with legal responsibilities
- you must pay yourself correctly
- records must be accurate and timely
- decisions need to be planned, not guessed
If your accountant hasn’t explained the operational changes — they’ve missed the most important part.
At Accounting Matters, we prepare clients for the mindset shift from sole trader to director, not just the paperwork.
2. “You Don’t Automatically Save Tax When You Go Limited”
This is one of the biggest myths we see.
Many sole traders are told:
“Just go limited — it’s better for tax.”
But that’s not always true.
What your accountant should be telling you is:
- tax savings depend on profit level
- they depend on how you pay yourself
- they depend on timing
- they depend on planning, not just structure
For some sole traders, going limited too early can:
- increase admin
- reduce flexibility
- provide little or no tax benefit
At Accounting Matters, we model the numbers before incorporation so you know:
- whether it’s right
- when it’s right
- how to do it properly
Honest advice saves money in the long run.
3. “Once-a-Year Accounting Won’t Work in a Limited Company”
This is a conversation many accountants avoid — because it requires more involvement.
Sole traders often get used to:
- one annual tax return
- a year-end meeting
- minimal contact
But limited companies don’t work like that.
What your accountant should be telling you is:
If you go limited, you need more frequent financial insight — not less.
Without regular reviews, limited companies risk:
- taking illegal dividends
- building up director loan issues
- being unprepared for Corporation Tax
- cashflow problems
- compliance stress
That’s why at Accounting Matters we strongly recommend quarterly management accounts for new limited companies — especially for sole traders transitioning for the first time.
4. “You Can’t Use the Company Bank Account Like Your Own”
This one catches new directors out all the time.
Sole traders are used to:
- paying personal bills from the business account
- topping up personal income whenever cash is available
Limited companies don’t work like that.
Your accountant should be clearly explaining:
- what a director’s loan account is
- how it works
- when it becomes a problem
- how to avoid tax consequences
Too many accountants only mention this after it’s gone wrong.
At Accounting Matters, we teach clients before it happens — so mistakes never occur.
5. “Dividends Are Not Just ‘Extra Wages’”
Another common misunderstanding.
Some sole traders are told:
“You’ll take a salary and dividends.”
But no one explains:
- dividends must come from profits
- they must be declared properly
- timing matters
- paperwork matters
- taking too much can cause tax issues
Your accountant should be guiding you on:
- how much is available
- when it’s safe to take
- how it affects your personal tax
- how it links to Corporation Tax
At Accounting Matters, dividend planning is built into our quarterly reviews — not left to guesswork.
6. “MTDITSA Changes the Game for Sole Traders”
Many sole traders still don’t fully understand what MTDITSA means for them.
Your accountant should be telling you:
- quarterly digital submissions will be required for many sole traders
- admin will increase
- systems must be digital
- once-a-year bookkeeping will no longer be enough
And crucially:
This is one of the biggest drivers behind why many sole traders are choosing to go limited sooner.
If your accountant hasn’t discussed how MTDITSA affects your long-term structure choice, they’re not planning ahead.
7. “Cloud Software Isn’t Optional Anymore”
Some accountants still treat cloud accounting as a “nice to have.”
It isn’t.
Your accountant should be telling you that:
- real-time bookkeeping is essential
- digital records protect you
- cloud systems make compliance easier
- better data leads to better decisions
At Accounting Matters, every new limited company client is set up on:
With full training and support — not just logins and links.
8. “We Should Be Talking More Than Once a Year”
Perhaps the biggest red flag of all:
If you only hear from your accountant once a year, they can’t help you plan.
Your accountant should be asking:
- how your year is going
- whether profits are increasing
- whether cashflow is tight
- whether you’re thinking of hiring
- whether prices need reviewing
- whether tax planning opportunities exist
At Accounting Matters, we build ongoing relationships — not annual transactions.
Because businesses don’t fail at year-end.
They fail gradually, in silence, between meetings.
Why We Do Things Differently at Accounting Matters
We don’t believe in:
- surprise tax bills
- last-minute panic
- jargon-heavy explanations
- “that’s just how it is”
We believe in:
- early conversations
- honest advice
- planning before problems
- explaining things clearly
- helping clients feel confident
For sole traders moving to limited companies, our role is to:
- guide the transition
- explain responsibilities
- build structure
- set expectations
- provide ongoing support
Not just file forms and disappear.
Conclusion – You Deserve Better Conversations
If you’re a sole trader thinking about going limited, the biggest risk isn’t making the move.
It’s making the move without the right advice.
Your accountant should be:
- talking to you regularly
- planning ahead
- explaining options
- warning you of risks
- helping you grow
If those conversations aren’t happening, it may be time for a change.
At Accounting Matters, we pride ourselves on having the conversations most accountants don’t — because those are the ones that actually matter.
If you’re thinking about going limited and want honest, proactive advice, we’d love to talk.
📞 01773 747990
📧 welcome@accountingmatters.co.uk
🌐 www.accountingmatters.co.uk
Accounting Matters — because you deserve an accountant who tells you what you need to know, not just what’s easy to say.