As a YouTuber, should I be a sole trader or limited company?
Whether to trade as an individual or as a company should be one of the first decisions you make about the day-to-day running your business. It’s important to take the option that’s right for you, as whatever you choose will have certain implications for tax, legal status, liability and control. Remember, though: your decision doesn’t have to be final. You can change your mind at any point and switch.
If you have a small channel of your own, being a sole trader is your simplest option. You get complete control over your business decisions and you keep all of your profits (after paying income tax). You’ll have a lot less HMRC paperwork to fill out and lower accountancy costs. On the flip side of that, you will take home less net pay from the same turnover than you would if you were a limited company (due to national insurance rules). You will also be liable for your debts and possessions (such as your home) if things go wrong. It will be harder to raise financial support, as a sole trader, and may make you seem less credible to companies you wish to collaborate with.
That’s why a lot of YouTubers start out as a sole trader and become a limited company much later, when their YouTube business expands or when it becomes clear it is going to expand. As your channel grows and your income increases, it makes sense to protect your business and establish your brand beyond being self-employed and becoming a fully-fledged business in your own right.
Just be aware, that although potential clients will look on you more favourably as a limited company, you will be subject to more rules and regulations, such as not being able to withdraw money from your business without formally recording it as a salary, dividend or loan.
Once you've made this decision, it's time to set yourself up as a sole trader or a limited company