Choosing a Legal Structure for your Business
Get the right legal structure for your business right from the outset.
Did you know? As a "Sole trader" you are personally liable for your business.
Choosing the right business legal structure can have implications on the tax you pay, the paperwork you are required to produce and whether you are personally liable for your business. Here is our overview of the various legal structures you can choose from and what they mean to you.
You must choose a business structure when you start a business and the structure you choose will define your legal responsibilities, such as:
Types of business
Most businesses in the UK are either:
There are other legal structures which are specific to businesses that help people or communities eg ‘social enterprises’.
Other types of company
Most Limited Companies are private companies limited by shares. There are 3 other types.
Private company limited by guarantee
Directors or shareholders financially back the organisation up to a specific amount if things go wrong.
Private unlimited company
Directors or shareholders are liable for all debts if things go wrong.
Public limited company
Companies where shares are traded publicly on a market, like the London Stock Exchange.
There is also the following structure:
An ‘unincorporated association’ is an organisation set up through an agreement between a group of people who come together for a reason other than to make a profit, eg. a voluntary group or a sports club.
You don’t need to register an unincorporated association, and it doesn’t cost anything to set one up.
This is not a legal structure, so the association won’t be recognised by the law. Individual members are personally responsible for any debts and contractual obligations.
Read more about setting up as a Sole Trader...
Read more about setting up as a Limited Company...
Read more about setting up as a Partnership...
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