Work sheet

Brain Dump

Which business structure is the best for your freelance journey?

Work sheet

Brain Dump

Which business structure is the best for your freelance journey?

Work sheet

Brain Dump

Which business structure is the best for your freelance journey?

Three arrows on the ground in three different directions, a pair of shoes in front of them
Three arrows on the ground in three different directions, a pair of shoes in front of them
Three arrows on the ground in three different directions, a pair of shoes in front of them

Do you know what business structure you’ll have? In the UK, there are 3 types

  • 👩🏻‍💻 Sole trader

  • 🏢 Limited company

(PSC = Personal service company)

  • ☂️ Umbrella

Depending on where you (or your limited company) are tax resident, you might have different options than the ones mentioned above. But if you’re based in the UK, these are your options.

If you’re a tax resident outside the UK, I’m sorry, I can’t know everything. So you’ll have to do a little more research. But today, we’ll find out which business structure is best for you.

Define your business structure

If you’re a tax resident in the UK

Have a look at the pros and cons of each business structure below 👇

If you’re a tax resident elsewhere

Your task today is to find out what options you have and choose one that works best for you to get started.

What is a business structure?

The business structure of your freelance business will define the legal stuff of your company. This includes things like liability, taxes, legal requirements etc.

If you’re a tax resident in the UK, I normally recommend people to open a Limited Company.

☝️ BUT only do this if you know that freelancing will be your main source of income AND if you’re earning more than £30k/year.

Disclaimer: Before you go and open your limited company, always talk to a financial adviser. Your circumstances might be different. I’m not a financial adviser, I can only give you recommendations based on the knowledge I accumulated as someone who has been freelancing for 5 years.

Also, laws are constantly changing. I highly recommend to get an accountant to make sure you’re finding what’s best for you.

UK Business structures

A little more information about each of the business structures:

👩🏻‍💻 Sole trader

This is a common choice for many freelancers, especially those who just start freelancing on the side. As a sole trader, you have full liability if something goes wrong. But it’s very easy to set yourself up as a sole-trader.

Pros: easy to set up

Cons: not the most tax-efficient, full liability (get insurance!)

☂️ Umbrella

An umbrella company is basically a “middle-man”. It’s a company that hires you while you’re freelancing elsewhere and works as an employer for you.

If your freelance contract is inside IR35* you will not have a choice but you’ll likely have to go with an umbrella company. It’s not the best option when it comes to taxes. But when you just get started as a freelancer, this might be a good choice for you if you want to save time on the admin and accounting side of things.

Pros: you’re basically an “employee” and don’t have to worry about paying the right amount of taxes - the umbrella company will sort it out for you. It’s a good choice when you want to freelance full time but still figure out if freelancing is for you.

Cons: can’t claim expenses, not tax-efficient

🏢 Limited company

It’s pretty easy to set up a limited company in the UK. I was quite shocked, because in Austria (where I’m from) you need at least €30,000 in the bank to be able to open a Ltd. But in the UK, all you need is around £13 to register on companies house and congrats: your a company director 🥳

Pros: can claim expenses, pay yourself a salary and draw dividends; most tax efficient

Cons: more admin, you need to have a registered accountant.

*IR35 is a legislation for the UK only. If you’re outside the UK and aren’t planning to work with UK clients, you can forget about it. If you’re in the UK, this can be a complex topic to wrap your head around. But for now, don’t spend too much time reading into it. You can worry about it once you’ll have your first inside IR35 contract.

Online course - Freelance Blueprint

How to manage your finances as a freelancer

When it comes to tax efficiency and finances, it takes way more than a 5 minute task to learn what you need to know as a freelancer.

If you’re unsure how a business structure affects your taxes, then this course is made for you.

Two quotes of users who are happy about the 'How to manage your finances as a freelancer'-course

Join the next cohort for the Freelance Blueprint - How to manage your finances as a freelancer course. This course is designed to teach you everything you need to know about finances without hour-long googling.

Sign up to the waitlist to get more information.

Let’s get into business

Hopefully, this information about business structures helped you decide which one is right for you. If you’re still unsure which one to pick, Freelancer, just send me an email and I will try my best to help.

👩🏻‍💻 Free Guide

The exercise described in this blog article is one of the steps of my free guide for people who want to create a work life that works for them.

Get the guide for free.

Do you know what business structure you’ll have? In the UK, there are 3 types

  • 👩🏻‍💻 Sole trader

  • 🏢 Limited company

(PSC = Personal service company)

  • ☂️ Umbrella

Depending on where you (or your limited company) are tax resident, you might have different options than the ones mentioned above. But if you’re based in the UK, these are your options.

If you’re a tax resident outside the UK, I’m sorry, I can’t know everything. So you’ll have to do a little more research. But today, we’ll find out which business structure is best for you.

Define your business structure

If you’re a tax resident in the UK

Have a look at the pros and cons of each business structure below 👇

If you’re a tax resident elsewhere

Your task today is to find out what options you have and choose one that works best for you to get started.

What is a business structure?

The business structure of your freelance business will define the legal stuff of your company. This includes things like liability, taxes, legal requirements etc.

If you’re a tax resident in the UK, I normally recommend people to open a Limited Company.

☝️ BUT only do this if you know that freelancing will be your main source of income AND if you’re earning more than £30k/year.

Disclaimer: Before you go and open your limited company, always talk to a financial adviser. Your circumstances might be different. I’m not a financial adviser, I can only give you recommendations based on the knowledge I accumulated as someone who has been freelancing for 5 years.

Also, laws are constantly changing. I highly recommend to get an accountant to make sure you’re finding what’s best for you.

UK Business structures

A little more information about each of the business structures:

👩🏻‍💻 Sole trader

This is a common choice for many freelancers, especially those who just start freelancing on the side. As a sole trader, you have full liability if something goes wrong. But it’s very easy to set yourself up as a sole-trader.

Pros: easy to set up

Cons: not the most tax-efficient, full liability (get insurance!)

☂️ Umbrella

An umbrella company is basically a “middle-man”. It’s a company that hires you while you’re freelancing elsewhere and works as an employer for you.

If your freelance contract is inside IR35* you will not have a choice but you’ll likely have to go with an umbrella company. It’s not the best option when it comes to taxes. But when you just get started as a freelancer, this might be a good choice for you if you want to save time on the admin and accounting side of things.

Pros: you’re basically an “employee” and don’t have to worry about paying the right amount of taxes - the umbrella company will sort it out for you. It’s a good choice when you want to freelance full time but still figure out if freelancing is for you.

Cons: can’t claim expenses, not tax-efficient

🏢 Limited company

It’s pretty easy to set up a limited company in the UK. I was quite shocked, because in Austria (where I’m from) you need at least €30,000 in the bank to be able to open a Ltd. But in the UK, all you need is around £13 to register on companies house and congrats: your a company director 🥳

Pros: can claim expenses, pay yourself a salary and draw dividends; most tax efficient

Cons: more admin, you need to have a registered accountant.

*IR35 is a legislation for the UK only. If you’re outside the UK and aren’t planning to work with UK clients, you can forget about it. If you’re in the UK, this can be a complex topic to wrap your head around. But for now, don’t spend too much time reading into it. You can worry about it once you’ll have your first inside IR35 contract.

Online course - Freelance Blueprint

How to manage your finances as a freelancer

When it comes to tax efficiency and finances, it takes way more than a 5 minute task to learn what you need to know as a freelancer.

If you’re unsure how a business structure affects your taxes, then this course is made for you.

Two quotes of users who are happy about the 'How to manage your finances as a freelancer'-course

Join the next cohort for the Freelance Blueprint - How to manage your finances as a freelancer course. This course is designed to teach you everything you need to know about finances without hour-long googling.

Sign up to the waitlist to get more information.

Let’s get into business

Hopefully, this information about business structures helped you decide which one is right for you. If you’re still unsure which one to pick, Freelancer, just send me an email and I will try my best to help.

👩🏻‍💻 Free Guide

The exercise described in this blog article is one of the steps of my free guide for people who want to create a work life that works for them.

Get the guide for free.

Do you know what business structure you’ll have? In the UK, there are 3 types

  • 👩🏻‍💻 Sole trader

  • 🏢 Limited company

(PSC = Personal service company)

  • ☂️ Umbrella

Depending on where you (or your limited company) are tax resident, you might have different options than the ones mentioned above. But if you’re based in the UK, these are your options.

If you’re a tax resident outside the UK, I’m sorry, I can’t know everything. So you’ll have to do a little more research. But today, we’ll find out which business structure is best for you.

Define your business structure

If you’re a tax resident in the UK

Have a look at the pros and cons of each business structure below 👇

If you’re a tax resident elsewhere

Your task today is to find out what options you have and choose one that works best for you to get started.

What is a business structure?

The business structure of your freelance business will define the legal stuff of your company. This includes things like liability, taxes, legal requirements etc.

If you’re a tax resident in the UK, I normally recommend people to open a Limited Company.

☝️ BUT only do this if you know that freelancing will be your main source of income AND if you’re earning more than £30k/year.

Disclaimer: Before you go and open your limited company, always talk to a financial adviser. Your circumstances might be different. I’m not a financial adviser, I can only give you recommendations based on the knowledge I accumulated as someone who has been freelancing for 5 years.

Also, laws are constantly changing. I highly recommend to get an accountant to make sure you’re finding what’s best for you.

UK Business structures

A little more information about each of the business structures:

👩🏻‍💻 Sole trader

This is a common choice for many freelancers, especially those who just start freelancing on the side. As a sole trader, you have full liability if something goes wrong. But it’s very easy to set yourself up as a sole-trader.

Pros: easy to set up

Cons: not the most tax-efficient, full liability (get insurance!)

☂️ Umbrella

An umbrella company is basically a “middle-man”. It’s a company that hires you while you’re freelancing elsewhere and works as an employer for you.

If your freelance contract is inside IR35* you will not have a choice but you’ll likely have to go with an umbrella company. It’s not the best option when it comes to taxes. But when you just get started as a freelancer, this might be a good choice for you if you want to save time on the admin and accounting side of things.

Pros: you’re basically an “employee” and don’t have to worry about paying the right amount of taxes - the umbrella company will sort it out for you. It’s a good choice when you want to freelance full time but still figure out if freelancing is for you.

Cons: can’t claim expenses, not tax-efficient

🏢 Limited company

It’s pretty easy to set up a limited company in the UK. I was quite shocked, because in Austria (where I’m from) you need at least €30,000 in the bank to be able to open a Ltd. But in the UK, all you need is around £13 to register on companies house and congrats: your a company director 🥳

Pros: can claim expenses, pay yourself a salary and draw dividends; most tax efficient

Cons: more admin, you need to have a registered accountant.

*IR35 is a legislation for the UK only. If you’re outside the UK and aren’t planning to work with UK clients, you can forget about it. If you’re in the UK, this can be a complex topic to wrap your head around. But for now, don’t spend too much time reading into it. You can worry about it once you’ll have your first inside IR35 contract.

Online course - Freelance Blueprint

How to manage your finances as a freelancer

When it comes to tax efficiency and finances, it takes way more than a 5 minute task to learn what you need to know as a freelancer.

If you’re unsure how a business structure affects your taxes, then this course is made for you.

Two quotes of users who are happy about the 'How to manage your finances as a freelancer'-course

Join the next cohort for the Freelance Blueprint - How to manage your finances as a freelancer course. This course is designed to teach you everything you need to know about finances without hour-long googling.

Sign up to the waitlist to get more information.

Let’s get into business

Hopefully, this information about business structures helped you decide which one is right for you. If you’re still unsure which one to pick, Freelancer, just send me an email and I will try my best to help.

👩🏻‍💻 Free Guide

The exercise described in this blog article is one of the steps of my free guide for people who want to create a work life that works for them.

Get the guide for free.