Starting a business is an exciting journey to embark on. The freedom of being your own boss and enjoying every single penny you make is a wonderful reward of working for yourself.
To start, you have to decide the business structure that is best suit the way you do business. You have three options that are as a sole trader or partnership or trading as a limited company. Each structure has different legal, records keeping and taxation requirements. It is worth giving it a good thought.
Sole Trader or Proprietor
Being a sole trader is the simplest way to run a business, you get keep all the profits and there is no initial registration fees for setting up; you only need to inform HM Revenue and Customs of your business. However, you are personally liable to all debts incurred by your business. This means your home and personal assets may be at risk if your business get into trouble.
Setting up a partnership is relatively simple and flexible
In a partnership, you share risks, costs and responsibilities with your business partners. Each partner takes a shared of agreed profits and also jointly responsible for any debts of the business. This means you and your business partners personal assets are at risks if the business fails. This is similar to that of trading as a sole trader.
A limited company
Forming a limited company is quick and registration with the Registrar of Companies can be done on the same day. Many accountants and company formation agents provide this service at relatively cheap cost. Under the Companies Act 2006, the incorporation process has ruled out the company secretary requirement. This means you can be the only director and the sole shareholder of the company. Hassle free!
In addition, trading as a limited company gives more protection to you. Under Company Law, a company is a legal entity by itself, its assets and liabilities are separate to that of its owners. Therefore, your liability is limited to the capital invested in the company.
Canterbury Accountancy - Providing solutions to your business
