New founders often default to whichever structure a friend used, without weighing the two real questions that should decide it: how much personal liability exposure you're comfortable with, and whether outside investment is part of the plan.
A sole proprietorship is faster and cheaper to set up — largely just a trade license — but it doesn't separate your personal assets from business liabilities. A private limited company costs more up front and carries ongoing compliance (annual returns, statutory registers) but limits your personal exposure and is the only realistic structure if you intend to bring in investors or co-founders with formal equity.
A pattern worth naming: freelancers and single-founder service businesses often over-index on "looking more official" and register a private limited company before they need one, taking on compliance overhead a trade license would have avoided for the first year or two.
If you're genuinely unsure which side of that line you're on, it's a 20-minute conversation, not a guess — the cost of picking wrong is mostly time and paperwork, but it compounds the longer you wait to fix it.