Am I employed or self-employed?

If you’ve recently made the transition from sole trader to a limited company, one question, in particular, might be on your mind; are you now employed or self-employed? Well don’t worry, you’re not the first to have stumbled across this thought and you most certainly won’t be the last. Today we’re going to clear up all of this once and for all so that you know exactly where you and your business lie in regards to your employment situation.


When you were operating as a sole trader, you were both acting as an employee and also as the employer. So in this sense, you were self-employed by yourself. However, now you have moved on to becoming a limited company, there is, in fact, another entity within your business, the limited company itself and you. How the situation has changed now is that instead of being employed by yourself, you’re now employed by the limited company. In this sense, you’re now ‘employed’ when beforehand you were ‘self-employed’.


So what’s changed now you’re employed and not self-employed? Well, now that your business is established as a limited company, you’ll now find that you can claim on a much wider range of expenses that you were permitted to when you were acting as a sole trader. This, in turn, will save you and your business money the longer time goes on, save that the only issue you have is that you’ll have more paperwork on your hands when it comes to filing your VAT returns yearly.


Also, now that your business has transitioned into a limited company, it means that you yourself as an individual are no longer personally liable for any debts that your business may incur. So now that you’re employed and no longer self-employed this has lifted this burden off your shoulders so that you can rest assured that you aren’t liable for what could be tens of thousands of pounds worth of debt. This is one of the huge benefits of being employed by a limited company as you yourself are reducing your risk of exposure to risk.




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