Trading in business as a sole trader can be a precarious existence, as you are solely responsible for the debts of the business, due to you and the business being one and the same. A sole trader is personally liable for all the business liabilities and as such earns the right of privacy over his or her financial affairs. This is fine when things are going well, but in the event business takes a turn for the worse, it can lead to the nightmare scenario of losing all your assets.
In contrast, a limited liability company has to publish accounts at Companies House in return for it’s status as an artificial person, distinct in law from those who control and own it. The directors and shareholders are then not liable for the debts of the business unless they have signed specific guarantees. While an insolvent company can be placed into Liquidation or Administration, this is not possible for a sole trader.