The standard comparison never touches your own figures, which is why it reads well and decides nothing.

Take the tax point. A company pays corporation tax at 19% where profit is £50,000 or less, and 25% where profit is over £250,000, with marginal relief in between (GOV.UK). A sole trader is taxed on profit as income, whatever happens to the money afterwards.

That difference only pays you if profit stays in the company. Draw every pound out and dividend tax follows the corporation tax, which closes most of the gap.

The lists also skip a detail that catches owners with more than one company. Both the £50,000 and £250,000 bands are reduced by the number of associated companies, and for short accounting periods. A second company you set up for an unrelated venture can push the first one into a higher effective rate.

And no table can tell you whether your largest client’s procurement team will contract with an individual. Some will not, and that single answer sometimes settles the whole question before tax comes into it.

The first question I ask a sole trader is not what you earn. It is how much of it you actually need to live on.

If you make a good profit and spend all of it, the two structures land closer together than most articles suggest. The saving in a company comes from profit you leave inside it, taxed once at corporation tax rates until you take it out.

Where incorporating tends to earn its keep:

• You consistently leave money in the business for equipment, staff or a quiet quarter.
• A spouse or partner does real work in the business and can hold shares.
• You want meaningful pension contributions paid by the business rather than out of taxed income.
• Your income is lumpy and you would rather choose which tax year a dividend falls into.

That last one matters more than people expect. As a sole trader, a strong year is taxed as a strong year. As a director, you decide when dividends are declared, provided the reserves and the paperwork support it. See salary vs dividends for a company director for how that split usually works.

The “sole traders have less admin” argument is weaker than it was this time last year.

Making Tax Digital for Income Tax went live on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. Qualifying income is gross income from self-employment and property, counted before expenses or allowances. That means digital records, compatible software and quarterly summaries to HMRC (GOV.UK).

The threshold drops to £30,000 from April 2027 and to £20,000 from April 2028. Anyone reading this with a growing sole trade will be in scope soon enough.

Two things follow. First, the annual January scramble is being replaced by a quarterly routine, so the bookkeeping has to be current either way. Second, the admin gap between the two structures narrows. A company still has more filings, including accounts, a CT600, a confirmation statement and payroll. But the sole trader side is no longer the light-touch option it was, and that changes the honest weighting of the pros and cons.

Switching is a transaction, and transactions have consequences worth pricing before you file the form.

Money in the company is not your money. Take it without declaring a salary or a dividend and you create a director’s loan, which can bring a section 455 charge if it is still outstanding nine months after the year end. That is a charge worth understanding before, not after.

Your VAT registration moves to the new company, and the scheme choice should be revisited at the same time. One procurement consultant who joined Nexus had almost nothing in box 4, because his costs were overseas software and reverse-charge services. Moving him to the flat rate scheme cut his VAT bill every quarter, with no change to turnover.

Then there is the trade itself. Goodwill, equipment and any unused losses need handling properly; they do not simply move across because you kept the same customers. If you are applying for a mortgage in the next couple of years, ask the lender how they treat a newly appointed director before you change anything.

I would rather show you the numbers than repeat the thresholds other firms publish, because those thresholds are estimates, not rules.

The incorporation review puts your own figures side by side. Sole trader tax and National Insurance on last year’s results against the company position, with a realistic salary and dividend plan and the drawings you actually need. It includes a VAT scheme recommendation and a formation and handover plan if the answer is yes.

If the answer is no, I say so. Plenty of sole traders are better off staying put for another year, and hearing that costs you nothing.

For clients who do incorporate, the same routine follows. Structure, VAT scheme, pay and software reviewed on day one, then the corporation tax and dividend position forecast a month before the bill lands, so the money is there and the decision is yours. Everything sits in one monthly fee with the advice included, and I take three new clients a month so I am the person who replies.