Quite often we get calls throughout a week and a common question is "Am I protected?". What is the main difference to you as a person in business between a limited company and a being a sole trader? The simple answer is protection. When heading for insolvency a sole trader has the distinct disadvantage that their person debts and the business debts are one in the same thing. This is not always the case if you are running a limited company.
A benefit of having a limited company to a director is the protection that the limited liability status provides. If all of the company debts are unsecured and there are no personal guarantee signed on any of the agreements with creditors then you are far better protected that if you were a sole trader.
Clearly this does not mean that you can neglect your company's creditors, but what it does mean is that you can manage the situation with more personal security and less stress.
This seems to be a common misunderstandings when speaking with business people in the UK when discussing insolvency and the risks involved.
