There are many business structures that you can choose from when starting up your business :
- Sole trader – a business which is owned and run by one individual, who is fully responsible for all liabilities and commitments of the business
- Partnership – a business in which partners (owners) share with each other the profits or losses of the business
- Limited Company – an organisation that you can set up to run your business. It is responsible in its own right for everything it does and the finances for it are seperate to your personal finances. Any profits that are made belong to the Company after corporation tax is paid
- Limited Liability Partnership (LLP) – a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It shares elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence
- Proprietary Limited Company (PLC)– an independent legal entity able to do business in its own right. Shareholders own the company and Directors run the company. The directors of a company, as well as company employees, can be shareholders
- Trust – a business structure where the trustee holds property and earns and distributes income on behalf of the beneficiaries
You may also decide to operate your business as a :
- Home based business – a small business that operates from the business owner’s home office
- Independent contractor – an individual or business that provides goods or services to others under terms specified in a contract
- Franchise – an agreement under which a franchisor licenses a franchisee to operate a developed method of doing business that is identifiably associated with the franchisor. The franchisor also provides ongoing guidance, systems and assistance in return for periodic payment of fees and/or purchases
- Social enterprises – trade to tackle social problems, improve communities, people’s life chances, or the environment. They make their money selling goods or services in the open market, but reinvest their profits back into the business or the local community
Your legal and taxation obligations will vary depending on the type of business that you choose to operate
It’s important that you carefully consider all of the options to determine which business structure and type will suit to you. When you are starting a new venture on your own you would not want to register your business as a PLC
Having a chat with an accountant & explaining what you are aiming to do would be a wise choice
- Charities – are a whole new ball game – It is very unlikely you would want to start a business as such – but we will cover this later . . .