Choosing a Structure for Your New or Growing Business

Choosing a Business Structure

When you start a business, there are several different ways you can choose to operate. Each option has different tax treatments and rules, choosing a business structure that suits the needs of your business now and in the future is am important process.

Even if you’ve been self-employed for some time, it’s often the case that as your business grows and changes, the most appropriate structure changes too.

Depending on the size of your business, how much you’ll earn, and what kind of industry you’re in, there are different pros and cons to each approach.

There are three common business structures in the United Kingdom, all of which trade to make a profit. Choosing a business structure, that fits with your business plan is crucial for success.

UK Business Structures Considerations

When you are planning a new venture, it is wise to give careful consideration to the best structure for your business. If you decide to change the structure at a later date it can be done but may be costly and time consuming. Therefore, when choosing a business structure, considering the following may be helpful:

• The current and future business plans
• How many members are wanting to run the business
• The level of management control that is required
• The amount of capital that will be invested
• The level of privacy for the business finances

UK Business Structures General Obligations

There are different regulations and obligations attached to different business structures, and as the structure moves from one level to the next the obligations increase, the structure you choose will affect:

• Which agencies and authorities need to be notified
• The tax and national insurance to be paid
• The records and accounts that need to be kept
• The financial liability to its members if the business runs into trouble
• How the business can raise money
• How the business is managed and decisions made

What are the Three Main Business Structures?

The three main business structures in the UK that trade to make a profit are the the individual who is self self employed and classed as a sole trader. If two individuals set up business together then there is the partnership structure which can be general (the same as self employed) or limited liability which is an incorporated partnership. For one or more individuals who want limited liability there is the private company structure which can be limited or unlimited. from now, you will look back on as this as the best decision that you ever made.