How to choose a business structure

12th October 2018

Are you thinking about setting up a business?  If so, one of the first decisions you will need to make is that of business structure.

The main business structures are: sole trader, partnership, limited liability company, and limited liability partnership (LLP).

Sole trader – This is the easiest set up, with very little in the way of red tape.

Partnership – This is for 2 or more people coming together to build a business.  A partnership agreement should be drawn up to clarify arrangements e.g. ownership and profit split.

Limited company – A company has to be registered at Companies House and is subject to more rules and regulations e.g. filing of annual accounts, filing of a Confirmation Statement.  The main advantages of company status are limited liability (i.e. you are not personally responsible for the company’s debts) and tax – with the tax rate applicable to companies due to fall from 19% to 17% over coming years, your overall tax bill may be less than that as a sole trader/partnership.

LLP – This is a hybrid between partnerships and limited companies.

If you wish to discuss this further, please contact your local office or usual Whiting & Partners contact. Alternatively, we have a number of start-up seminars for new businesses looking for advice on business structure.  For more information please visit our events page.



 
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