An Influencer Accountant’s Guide to Tax, Costs & Legal Considerations
As an influencer, your income can grow quickly. But when it comes to structuring your business, should you remain a sole trader or switch to a limited company?
As a specialist influencer accountant, I’ll break down the pros, cons, and tax implications of each option so you can make the best choice for your brand.
What’s the Difference Between a Sole Trader and a Limited Company?
🔹 Sole Trader – You are the business. You personally receive all profits but are also responsible for any losses.
🔹 Limited Company – Your business is a separate legal entity, meaning your personal and business finances are separate. You pay yourself through salary and dividends.
Now, let’s compare the tax, earnings, and legal differences to help you decide.
1. Tax Implications: Which is More Tax-Efficient?
Sole Trader Tax
- You pay income tax on your total earnings (minus allowable expenses).
- You pay National Insurance (Class 2 and Class 4).
- Tax rates (for 2024/25):
- 0% on the first £12,570 (Personal Allowance)
- 20% on £12,571 – £50,270
- 40% on £50,271 – £125,140
- 45% on anything above £125,140
Limited Company Tax
- Companies pay Corporation Tax (currently 25%) on profits.
- You pay yourself via:
- A salary (subject to PAYE and National Insurance)
- Dividends (taxed at 8.75% / 33.75% / 39.35% depending on income)
- Tax benefits: Keeping a low salary and taking dividends often results in lower tax payments than sole traders.
Which Option is More Tax-Efficient?
✅ If you’re earning under £50,000, staying as a sole trader is often simpler and just as tax-efficient.
✅ If you’re earning £50,000+, a limited company can save you money due to lower tax rates on dividends.
2. Legal Protection & Financial Risk
🔸 Sole Trader: You are personally liable for debts. If a client sues you or you have financial issues, your personal assets (home, savings) could be at risk.
🔹 Limited Company: Your company is legally separate from you. If something goes wrong, your personal assets are protected, and only the company is liable.
💡 Best for: If you want added security and professionalism, a limited company is safer.
3. Business Expenses & VAT Considerations
💳 Sole Trader: You can claim expenses like equipment, software, and travel costs. However, some expenses (e.g., home office claims) are stricter than for companies.
🏢 Limited Company: You can claim more tax-deductible expenses, such as:
✅ Camera, lighting, and social media software
✅ Business travel & client meetings
✅ Director’s pension contributions (fully tax-deductible)
✅ A separate business bank account (essential for tax efficiency)
💡 VAT Warning! If your income exceeds £90,000 per year, you must register for VAT. This applies to both sole traders and limited companies.
4. Professionalism & Brand Growth
🔹 Limited companies appear more professional to brands and agencies.
🔹 Many large brands prefer working with companies rather than individuals.
🔹 You’ll find it easier to get business loans, partnerships, and sponsorships.
💡 If you want to scale your business and attract high-profile brand deals, incorporating may be a smart move.
5. Accounting & Admin: Which is Easier?
📌 Sole Trader:
✅ Less admin – You only file a Self-Assessment tax return once a year.
✅ No Companies House registration.
✅ Simple record-keeping.
📌 Limited Company:
🚨 More admin – You must:
- File annual accounts with Companies House.
- Submit corporation tax returns to HMRC.
- Run PAYE payroll if paying yourself a salary.
💡 If you prefer simplicity, staying as a sole trader is easier. However, a good influencer accountant can handle company admin for you!
So, Should You Set Up a Limited Company?
👉 Stay as a Sole Trader if:
✅ You earn under £50,000 per year.
✅ You want simple tax and accounting.
✅ You don’t need legal protection for assets.
👉 Go Limited if:
✅ You earn £50,000+ (to save tax).
✅ You want brand credibility and easier collaborations.
✅ You need financial protection and lower liability.
Need Help Deciding? Work with an Influencer Accountant 🚀
Whether you’re just starting out or scaling your business, choosing the right setup is crucial. As a specialist influencer accountant, I can help you:
✅ Set up your business structure the right way.
✅ Legally reduce your tax bill.
✅ Keep your finances stress-free.
📩 Get in touch today for expert influencer accounting advice!