The main advantage of running your business as a limited company is that you are likely to pay less personal tax than a sole trader.
Company profits are subject to Corporation Tax. Small businesses are taxed at the ‘small profits rate’ which is currently set at 20%. Larger companies currently pay corporation tax at the ‘main rate’ of 21% on profits over £1.5 million. From April 2015, both rates will be 20%.
As a sole trader, your entire income is subject to NIC rules. Running your business as a limited company could therefore help you to take home more of your earnings.