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New business start ups can take a variety of forms - a sole trader, a partnership, a limited liability partnership or a limited company.
We provide a brief overview of the main different forms of businesses below:
Sole trader: operating as a sole trader is a cheap and informal way to run your business where there is one owner, but comes with personal liability for all debts and liabilities of the business.
Partnership: where there are two or more people running a business, forming a general partnership would be appropriate where they wish to have fewer legal formalities with the setting up or on-going operation of the business’ affairs. However, liability is unlimited and the partners’ own assets are at risk. In addition, a formal partnership agreement is recommended.
Limited liability partnership (LLP): as suggested by the name, forming an LLP limits the liabilities and debts of the business to the LLP and not the individuals running the business. The LLP has to be incorporated and registered with Companies House and there is a fee. There are also some annual filing obligations (such as the filing of annual accounts), some of which come with a small fee.
Limited company: there are two types of limited companies; companies limited by shares and companies limited by guarantee. Both types of company must have articles of association and have formation and annual filing requirements and related fees. A company limited by shares also generally limits the liabilities and debts of the business to the company and not to the people who run it. There are key differences between the two companies and a company limited by shares would be the usual form of company for a business.
There are a number of factors to take into consideration when choosing which type of business to form. Glanvilles Corporate team can provide advice on the various benefits and implications of choosing one form of business over another depending on the type of business you intend to run and your individual circumstances.
We are used to assisting clients who are going into business for the first time and we have wide experience in providing advice to new businesses over a range of industry sectors.