The classic accountancy answer to “should I become a limited company?” is “it depends.” That’s true. It’s also unhelpful. So here are the three things I find myself raising most often with sole traders and partnerships thinking about incorporating in 2026.
1. The break-even point isn’t where it used to be.
Years ago you’d hear “above £30k profit, go limited.” That was already a simplification, and the changes to dividend tax and the corporation tax band structure have moved the actual numbers. For many sole traders earning between £30k and £60k of profit, the post-tax difference between staying as a sole trader and incorporating is now meaningfully smaller than it was — and in some cases, after compliance costs, the limited company route is actively worse.
The point isn’t that incorporation is dead. It’s that the maths needs running on your specific numbers, not on rules of thumb.
2. The reasons that aren’t tax often matter more.
Limited liability matters when you have employees, sub-contractors, premises, or work that genuinely carries professional risk. It matters less if you’re a freelance consultant with low overheads and no creditors. Lenders, contracts and procurement portals sometimes require a limited company — that’s a legitimate reason to incorporate even if the tax case is marginal.
Where I’d push back is on incorporating because someone said “it’ll look more professional.” Clients do not, in my experience, choose their accountant — or anyone else — on the strength of a Ltd suffix.
3. Don’t underestimate the second job.
The thing nobody warns you about is that running a limited company is a second small administrative job sitting on top of your first one. You file confirmation statements. You file accounts. You run the director’s loan account properly. You track dividends against profits. You keep the company’s records separate from your own.
If that’s a fit for how you work, fine. If you’ve been doing the bookkeeping reluctantly as a sole trader, incorporation will not make it more enjoyable.
How I’d advise approaching it
Run the numbers on the actual profit you expect, not the round one. Make a separate, honest call about whether limited liability matters for your work. And then weigh that against the additional admin you’re signing up for.
If you’d like that conversation in front of your real numbers, that’s the kind of thing a first call is good for.