Sole Trader = Self employed.
Limited company = director AND/OR employee of the business, you're not technically self-employed. A director takes dividends, an employee takes a salary. You have to have at least 1 director (you) and the directors share the profits via dividends normally (i.e shareholders).
The key to becoming LTD depends mainly on two things.
1) Will you be able to work OUTSIDE of IR35 legislation
2) Will you be looking to employ people
The first one needs some research on your part because different industries have different needs from contractors. If a contract or piece of work you take on falls INSIDE of IR35 then you get taxed as if you are an employee and will probably need the services of an umbrella company. If most of your work is going to be INSIDE then you might as well just use umbrella companies who will sort out all your tax affairs. If most of your work is going to be OUTSIDE then you will need an accountant and they will (should) guide you on tax/NI/VAT/insurance (public and employer liability)/IR35 compliance etc. There are even Umbrella companies who offer a hybrid service where you can switch between umbrella/accountant depending on the contract you have taken on.
It should be remembered that your daily rate for INSIDE work needs to be about 7 - 10% higher than for OUTSIDE work but generally after a while you won't care. The rate is good either way and you just take whatever comes along at whatever rate, sometimes good, sometimes not as good.
https://forums.contractoruk.com/ is a good place to read up on. My accountant is pretty good if you need a recommendation but they have no umbrella option. My current gig is INSIDE IR35 after 6yrs outside, so I had to choose an umbrella but you're not free to choose just anyone, there's usually a preferred supplier list from the end client and you need to research the options carefully, they're seemingly less regulated than accountants.
