Personal Trainer - Sole Trader or Limited Company

---

PTHub Author info:-  Founder and Personal Trainer Marketer Chris Laing read my Personal Trainer Marketing Blog at PTHub.com & follow me on Twitter Join my Personal Trainer Forum Read more from this author

---

As a self employed Personal Trainer you will have to decide as whether to trade as a Sole Trader or as a Limited Company. The choice is yours and isnt determined by your income.
There are pro’s and con’s to each, however if you believe you can trade profitably for 3 consecutive years (dont underestimate this feat), then you should definitely consider trading as a limited company as the future benefits of having 3 years profitable accounts on a limited company will leave you in a very good position should you wish to grow and expand your business interests.

So, lets look at both means of trading and lets see what the difference is….

Sole Trader - A sole trader is basically a business that is a business but isnt a limited company (whereby a limited company is a ‘Company’) (dont worry, its not really confusing)

You can start trading straight away as long as you notify the Inland Revenue within the first 3 months of you starting trading and you will be required to fill in an annual Self Assessment form. The Inland revenue can be reached by calling 08459 15 45 15

That is basically it! However bear in mind that YOU as a sole trader are fully liable for all your business debts and should your business fail with debts, your private home and possessions are liable to your creditors and the government.

You can trade as a name e.g. SJ Personal Training but when dealing with finance and the government you must use the full title e.g. Simon Jones Personal Training or Simon Jones trading as SJ Personal Training.

You are responsible for paying your own tax and national insurance and if your earnings are over £64,000 annually you are liable to pay VAT at the current rate.(see my article - Personal Trainers and VAT)(you pay this whether you are a sole trader or a limited company if earnings exceed £64,000)

Limited Company - A Limited Company is a Company with Directors and Shareholders (with one acting as a company secretary, this can be achieved by proxy meaning you only actually need you as long as you pay a formation agent / accountant to act as company secretary)

So why would you want to trade as a limited company? fair question! Well it affords you with ‘limited liability’, should your company fail, its debts will be kept within the company as long as you havent made any personal guarantees (never personally guarantee anything if you can help it). Also, it carries coudos, companies like to trade with other limited companies. It carries an air of superiority over sole traders and appears bigger and better! Also, should you trade successfully for over three years as a limited company, you will find access to finance a hell of a lot more easily. You will also find you benefit from better taxation regs, seek advice from an accountant!

Here’s the main reason most Personal Trainers don’t become a Limited Company…
Paperwork! you have a legal responsibility to the government and your employees (if you have any). Companies must comply with legislation covering tax’s (income tax, corporation tax, national insurance), health & safety, administration and employment. You can pay someone to do this for you but be aware, you must submit annual accounts each year to companies house to go on public record for all to see. (even if you make a loss)

So what will you choose to be? Its your call! Seek appropiate advice from a professional

PTHub can set up a Limited Company for you, It can be done in as fast as a day and we can also provide you with company branding or business branding. Contact us for more details.