The main differences between the two types of business are:
1. A Limited Company has Limited Liability – which means the assets and liabilities of the company are separate from the owners of the business. With a Trading Name registration, the business does not have limited liability and the liabilities of the business are not distinct from those of the business owners.
2. With a Limited company the Company Name has legal protection and no other Limited Company with the same or even similar name can be registered – this is not the case with a trading name where the company name can be registered by other applicants also – there is not the benefit of name protection
3. With a Limited company lower Corporation Tax applies to retained profits and the company has shares that can be bought and sold, with a Trading Name there are no shares to buy or sell and lower rates of Corporation Tax do not apply.