Should you be a sole trader, a partnership or a limited company?
When you start a business you have various business structure options available to you:
Sole trader, many businesses start up as sole traders as it’s the simplest of structures. A sole trader is responsible for everything legal and financial in the business, the business is effectively the same legal entity as the individual and tax arrangements reflect this.
Whichever structure you choose can be changed if your business needs evolve. Your accountant can provide professional advice on which structure you should choose and the tax implications.
A limited partnership limits each partners liability to their contribution.
Limited Companies are legal entities in their own right, if you are a Director of a Limited Company you are employed by the company, not self-employed.
Limited companies must register with Companies House and submit annual accounts. Many businesses become Limited Companies as they grow.
The structure you choose will affect how you need to register your business and work out your tax.
Don’t forget you will also need to register for VAT if your turnover exceeds the current VAT Threshold.
There is specific business support available for new businesses.