> As an employer/employee takes a year to fire people even when they don’t show up, ergo the incentive is to coast.
That is not true in the UK. In the first two years of service you can fire someone without a reason so long as you were not being deliberately discriminatory. Burden of proof on the employee for this
After that you just have to go through a fair process. Your decision is not in question, just whether you followed a fair process. I have worked in a place that routinely fired people for being 1 minute late on three occasions. Late once, verbal warning, late twice, written warning, late three times fired.
> As a founder you’re buried in bureaucracy and taxes, so the incentive is to stay an employee.
As a sole trader in the UK you can set up instantly. You have 3 months to let the tax authority know what you did, but no real threat if you leave it a bit longer. Setting up a corporate entity takes 10 minutes online. You can have that done by your accountant and the annual accounts done for maybe £300. No need for an audit until you have cross 2 out of three of these thresholds
Annual turnover of no more than £15 million
Gross assets of no more than £7.5 million
Average number of employees of no more than 50
Immediately you get a significant tax advantage over employees.
Easy access to capital is harder, unless you went to high-end private school that is. Development capital is not that hard to get, but seed funding is harder.