Starting up:
Types of structure
Being a sole trader is the simplest way to run a business. You can make all the decisions yourself without reference to other partners, all the profits are yours and there are fewer rules to comply with than if you operated through a company. You would form a partnership if you want to be self employed but also to work alongside other people. Each partner could then be involved in the decision making process, or you could have a 'sleeping' partner who just contributes financially to the partnership. Under the law of England and Wales, a partnership is not a separate legal entity.
A company is a separate legal entity, which is distinct from the shareholders, who own the company, and the directors who run the company. The two main types of company used by commercial businesses are private companies limited by shares and public limited companies. Private limited companies cannot offer shares to the public. Public Limited Companies can offer shares to the public but must have share capital of at least £50,000 before they can trade or borrow funds.
A limited liability partnership (LLP) is a hybrid between a partnership and a company, which is particularly attractive to larger professional partnerships. In broad terms an LLP has limited liability and needs to register and file documents at Companies House like a limited company but is taxed under the partnership rules.
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Where next?
Within Your business structure...Within Starting up ...
- Developing your business idea
- Setting up
- Accounting systems
- Payroll and PAYE
- National Insurance contributions
- VAT
- Income tax
- Corporation tax
- Contact us about this issue
- Read about how we can help you & your family
- Request a meeting with us
