Interior designers! what’s the best trading structure for your business?

Interior Designers! What’s the best trading structure for your business?

October 22, 2025

Whether you’re an interior designer looking to turn your passion into a business, or you’re already working successfully, and wondering about your next steps, choosing the right business structure is crucial.

At Sakura, we support many clients in the design and creative industries, and we know that clarity from the start can save time, money, and stress later on.

What Is a Sole Trader?

A sole trader is the simplest business structure in the UK. You run the business as an individual, and you’re personally responsible for its profits, losses, and liabilities. It’s a popular choice for interior designers starting out, as it’s quick to set up and get started.

Is being a Sole Trader right for Interior Designers?
Many interior designers begin as sole traders because it’s:

• Flexible – you can start quickly and scale gradually.
• Cost-effective – fewer admin and setup costs.
• Simple – no need to register with Companies House (just HMRC)

However, there are cons with this structure as well

• You’re personally liable for any legal claims or debts.
• You may pay more tax compared to a limited company once your income grows.
• Your brand may appear less “established” to some clients. [See biid.org.uk]

What about tax and related responsibilities?
As a sole trader, you must:

✓ Register with HMRC as self-employed
✓ File annual Self Assessment tax returns
✓ Keep accurate records and include this on your Self Assessment tax return
✓ Pay Income Tax and National Insurance on your profits

What is a Limited Company?

This is a formally incorporated structure registered at Companies House, that is a separate legal entity to you (the individual /director etc.) A limited company operates to a set of rules that are determined by UK company legislation and pays tax on the profits that it makes i.e. via a Corporation tax return.

Is a Limited Company right for Interior Designers?
Many interior designers either setup as a limited company structure from Day 1, or can at a later date ransition to a limited company as their business grows, because it offers:

• Tax efficiency – you pay Corporation Tax on profits and can take income as dividends, which may reduce your overall tax burden.
• Limited liability – your personal assets are protected if the business faces legal claims or debts.
• Professional image – operating as a limited company can enhance your credibility, especially with commercial clients or larger projects.
• Growth potential – it’s easier to bring in partners, raise investment, or hire staff under a company structure.

However, there are also ‘cons’ to consider with this structure, as follows:
• You’ll face more administration – including filing annual accounts and confirmation statements with
Companies House.
• There are setup costs and ongoing accounting responsibilities.
• You must comply with director duties and company law.
• Transitioning to a limited company from a Sole trader at a later date can be more complex and/or bring some tax liabilities

What about tax and related responsibilities?

As a limited company, you must:
✓ Submit updates to Companies House when company details
✓ Prepare & submit an annual return for public record with Companies House
✓ File annual accounts and Corporation Tax returns
✓ Under company law maintain accurate bookkeeping and financial records
✓ Pay Corporation Tax on profits
✓ Consider PAYE registration if you pay yourself a salary

Interior Design Business Setup Tips
Whether you’re launching or scaling your interior design business, here are some updated essentials to consider:

  1. Define Your Niche
    Are you focusing on residential, commercial, or sustainable design? A clear niche helps attract the right clients.
  2. Build a Strong Portfolio
    Showcase your work with high-quality images and testimonials. This is your most powerful marketing tool.
  3. Create a Business Plan
    Outline your goals, pricing, target market, and financial forecasts. Sakura can help with this if needed.
  4. Ensure that you keep accurate figures
    It is key to ensure that your bookkeeping and related admin are up to date and accurate
  5. Marketing Matters
    Use social media, a professional website, and networking to build visibility. Consider platforms like Instagram.

You may also need to consider the following issues:
• Business insurance (e.g. professional indemnity, public liability)
• Formal Contracts for clients (and suppliers)
• Licences or permits depending on the scope of your services
• VAT registration and returns where your turnover (incl FF&E in certain circumstances) increases above £90,000
• Guidance on managing cash on client projects

How Sakura Supports Interior Designers!

Whether you’re just starting out or ready to scale, Sakura is here to help you make informed decisions and stay compliant.

We offer tailored support for creative professionals, including:
• Business structure advice
• Tax planning and compliance
• Bookkeeping and accounting

To find out more about how we can support you through these decisions and how we can check which is the right option for you, then take the next Step and book a call!