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The fundamental differences between sole traders and limited companies A sole trader is a self-employed person with full ownership of their business: it does not have a separate legal identity from that of the owner. That means that a sole trader takes full liability. To become a sole trader, you must register using the government portal within three months of founding your business. A limited company is one which is legally distinct from the identity of the owner. It has a unique company identity, which must be registered (for a small fee) with Companies House. Because of this, there may be more than one owner or director, and they will have limited liability — meaning their personal finances won’t be affected should the business struggle financially