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I would think the opposite. As a sole trader you're personally liable for the company. Above a fairly low threshold for income you have to be VAT registered as

• carbonesc 15y ago
  You only have to register for VAT if your turnover reaches about 70,000 UKP [1]. I guess there are many people reading HN who will be running a business that will not immediately reach this level. Incorporating a limited company is not the only way for them to set up a business, which was the impression given by the article: "If you're trying to create a business, rather than just create a legal outlet for your freelancing, you will need a Limited Company." I am just suggesting people weigh the alternatives of limited company vs sole trader. The minimum viable form of business is the sole trader. It is possible to convert from sole-trader to limited company at a later stage. Certainly consult an accountant and consider the cost and tax implications of both approaches. When there are going to be multiple owners of the business from the start I would agree that a limited company gives clarity to your relationship and is probably better for this reason. [1] http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-thresholds.htm http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-threshold...