What is Sole Trader vs Limited Company?

A sole trader is an individual trading in their own name; they keep all profits but bear unlimited personal liability for debts. A limited company is a separate legal entity registered at Companies House, with liability capped at shareholders' investment. Sole traders pay Income Tax and Class 2/4 National Insurance via Self Assessment; limited companies pay Corporation Tax and directors take income as salary and dividends. The choice affects tax efficiency, credibility, admin burden and personal risk.