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I've recently moved to the UK and plan to form a limited company so that I can seek contract-work.

However I already need to invoice one of my (overseas) clients as I already have a contract with them (which soon ends). The contract references me (as a freelancer rather than a company) so I have assumed that I'll have to initially register as a sole trader (at least for the duration of the contract), invoice my client and pay the relevant self assessment tax / NI contributions before (or besides) forming a limited company.

Is this correct?

And furthermore, is it be possible to register both as a sole trader and as an ltd director or do I have to 'cease' being a sole trader before forming an ltd?

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Yes. I started as a Sole Trader and after a couple of years, registered as a limited company as my company grew.

You will still act as a company, but a sole trader is a lot easier and cheaper to set up. Once you have a healthy turnover, you can then look at registering as a Limited company. https://www.gov.uk/set-up-sole-trader/overview

Last question: No. You can only be one or the other. A director of a limited company can not also be a sole trader. So yes, you will cease the Sole Trader, and become a director.

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  • I have a very similar question, which this mostly answers - thanks! Did you switch to a Limited company for the liability limitation, or did you start to encounter clients who prefer this for VAT purposes?
    – halfer
    Jul 22, 2015 at 21:52
  • Both. I have a mortgage so it protects my personal assets (as long as i dont break the law etc.) and makes me more credible to potential customers.
    – IamOnStage
    Jul 24, 2015 at 7:57
  • Alright, thanks. I plan to start off as a sole trader, as it feels easier to set up, but knowing that a switch is worthwhile is helpful.
    – halfer
    Jul 24, 2015 at 8:57

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