Business structures

 

When you start a new business you have to decide on what structure it will take. The most common form is a sole trader. If you want to set up a limited company or partnership, it’s a good idea to obtain the legal advice and guidance of a company solicitor.

What business structures are available?

Anyone who wants to start their own business must carefully consider the legal structure of their business. You could start your business as a:

  • Sole trader
  • Limited company
  • Partnership
  • Social enterprise
  • Or you could buy a franchise

What are the differences?

The level of control you want over your overall liability in the company will determine which structure you should choose.

Sole traders have no protection and are liable for all of their business’s debts. Limited companies and partnerships can have a certain level of limited liability, as can social enterprises and franchises. Your company and commercial solicitor can help you identify the right structure for your new business.

Is it always better to form a company than stay a sole trader?

This really depends on the type of business you want to run. If your business is small and you don’t need the protection that limited liability offers, then the additional expense of a company would be a factor in your decision.

Another consideration is generally company status will be more tax efficient than a sole trader status. As your business begins to grow, you may wish to consider transferring to company status.

What services do company solicitors offer?

In addition to your accountant, a company solicitor can help with all the formalities of setting up a new company or partnership. There is a strict process that all new company formations must go through before they exist as a legal business.

A company solicitor can help you inform the HMRC (HM Revenue & Customs) about your new business, and also register your company with Companies House, answering any questions you may have about the registration process along the way.

For further information on alternative business structures in relation to legal businesses, see our page on 'Tesco Law'.

Do you need help choosing which business structure is suitable for your business? Contact Law can put you in touch with a company law solicitor specialising in business start-up matters. Please call us on 0800 1777 162 or complete the web form above.

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