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You are absolutely right; there are both benefits and drawbacks of sole trader and limited company trading vehicles.
The traditional distinction between the two centres on the fact that UK limited companies in theroy provide a barrier between the business and the owners and thereby protect them should the enterprise be unable to pay its debts.
Registering a company however does generally require more administration than a sole trader business. Statutory accounts, company registers and annual returns are some of the requirements which are imposed on limited companies which would not apply to a sole trader.
In the end the decision of whether to incorporate a company or to conduct business as a sole trader might centre on the individuals personal tax circumstances, their ability to meet and maintain the legal requirements necessary for running a company and good old fashioned personal preference.
Some more information on the differences between the two types of business entity can be found at http://www.completeformations.co.uk/companyfaqs/business_entities/types.html
I hope this information helps.
Vicky
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Vicky Lyons
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