Building your business the right way
It is important to seek advice as early as possible when considering new business ventures to ensure you protect your interests in preparation for any dispute in the future.
The most appropriate agreement for your latest business venture will be influenced and determined by various financial and legal issues. Furthermore, throughout a project, we will liaise closely with the client and their accountants to ensure that the proposed entity is as efficient as possible from a tax and operational perspective.
Important things to consider:
- Our solicitors regularly assist professionals, entrepreneurs, LLPs, partnerships and surveyors/architects.
- It’s important to be up-to-date with the latest commercial legislation.
- It’s important to create a formal agreement outlining rights and responsibilities if you’re business structure is for joint business owners.
Different ways of structuring your business
Ways to structure your business include Sole Traders, Partnerships, Limited Liability Partnerships (LLP), Limited Companies and Public Limited Companies. Being a Sole Trader is the easiest way to start a business. As a Sole Trader, you must register with HM Revenue & Customs within three months of starting up and you’re personally liable for any debts incurred by the business.
Additionally, a Partnership is a business structure set up by two or more people. This involves sharing profits, management, responsibilities, risks and liability.
You must register with Companies House to form a Limited Company. A Limited Company has a separate legal existence and is responsible for its own bank accounts, debts and loan applications. An advantage to this type of company – corporation tax is paid which is more favourable than income tax.
Finally, forming a Limited Liability Partnership is more expensive and complex to set up than a Partnership. Members aren’t responsible for another partner’s debts and are not personally liable for the negligence of another partner.
What do I need to consider when choosing a business structure?
When deciding how to structure your business you must consider important factors. For example, the size of your business, tax considerations, liability for debts, regulatory and compliance requirements, industry perception, distribution of profits, the likelihood of selling your business or share down to your children and the need to raise finance and external investment.
Choosing the correct structure from the beginning can eliminate potential disputes in later years. It saves time and money from having to solve these disputes and instead all focus can be on growing the business.