By Simon O’ Connor, 24th April 2016
Whether you’re just starting out or deciding on the right structure for your existing company, understanding the law around business organization is important. You’ll have to assess the nature of your business to figure out which option will afford you the most benefits.
The main business entities in the United Kingdom are:
- Sole Trader
UK Sole Trader
This can be the easiest to type of business entity run and set up however it does involve some risk. Unlike a Limited company your business is not a separate entity from you. A sole trader does obtain all profits, but is also personally liable for all debts or legal action taken against the business.
To become a sole trader, you are required to register with HM Revenue & Customs (HMRC) as soon as possible after you begin conducting business. If you have not registered by the 5th of October of your business’s second tax year you are liable to be penalized.
A partnership is a common structure for small businesses and are formed when two or more individuals are co-owners of a business venture. This structure allows individuals to contribute both their skills and assets.
Similar to the sole trader, setting up a partnership is a simple exercise but again does involve some risk. A partnership is not a separate legal entity from its owners. This means the partners are personally liable for all debts and obligations of the business. An additional concern is that all partners are liable for the actions of the others in relation to the business. One partner may be responsible for the debt of another if their assets are insufficient to cover an obligation.
UK Company Types
Running a company has many benefits and does increase your credibility as a business. The process is more complicated but has many potential benefits for your business.
To begin operating as a Company, you must register with both the Companies House and HM Revenue & Customs (HMRC). Unlike a sole trader or Partnership, the majority of companies are separate entity from their owner, meaning it has its own liabilities, debts and profits. You are not personally financially liable for what happens to the company.
The main company types incorporate in the United Kingdom are:
- Private Limited Company (LTD)
- Public Limited Company (PLC)
- Branch of a Foreign Company
- Limited Liability Partnership
Each company type has different attributes so before incorporating you must decide which type best suits the needs of your business. FOr more information on company types in the UK or to register your business in the UK please do not hesitate to contact us on +353 (0)1 646 1627 or email firstname.lastname@example.org.Contact US