Starting and Managing a Business
You have a choice of different business structures for your new venture and choosing the right one for you is fundamental to the future growth and successful operation of your business as it will affect things like who makes the management decisions, the tax you pay, the types of records you need to keep, how you raise money and your personal financial liability. The most popular legal structures are:
- Sole Traders - where you as an individual have the right to make all decisions affecting your business, but you are also personally responsible for any debts and obligations of the business, without any limit.
- Limited Liability Partnerships - a structure that works much like a partnership, but with the liability for the debts of members, or partners, are limited. A majority of LLPs are professional firms such as lawyers, accountants and surveyors.
- Partnerships - where a business is structured equally between one or more individuals. There are few formalities required to set up a partnership, however, it can be difficult to raise capital.
- Private Limited Company – a very common business structure, where a company has a legal identity in its own right, as opposed to the individual as a Sole Trader. The main benefit of a “Ltd” company is that the shareholders are not automatically liable for the actions or debts of the company.
- Public Limited Company– similar to a private listed company, except there are further rules and requirements surrounding a PLC, including the minimum capital of the company and corporate make up. PLCs tend to be larger companies, which publically trade shares on the Stock Exchange or AIM.
Therefore you must make sure you register under the right structure. If you get it wrong it could be an expensive and complicated mistake to rectify. If you are in any doubt as to which is the best legal structure for your business speak to a member of our Corporate and Commercial team for advice.