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 29, July 2010  
ULTIMATE START-UP KIT

To Do list - let us help you ask about our ultimate business start-up kitLots to do? 
Ask about our
Ultimate Business Start-Up Kit
We do the leg work to help set up your business!

To Do list - let us help you ask about our ultimate business start-up kitLots to do? 
Ask about our
Ultimate Business Start-Up Kit
We do the leg work to help set up your business!

 
18 top tips

simple but VERY effective tips from one of the UK's top entrepreneurs.  Find out more

simple but VERY effective tips from one of the UK's top entrepreneurs.  Find out more

 
IN THIS SECTION
 
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 First StepsLimited company or sole trader   

CHOOSING BETWEEN BEING A SOLE TRADER OR A LIMITED COMPANY Minimize

Business structures and trading status

When you startup your own small business there are four main choices on how you structure it.  This is generally known as your 'trading status'.  The main choices for your business structure are:


Setting up in business as a Sole Trader

The simplest business structure is a sole trader. The advantages of setting up a small business as a sole trader are that it takes almost no time, effort or money, and the on-going administration is much less than for the other possible business structures. The main disadvantage of structuring your business as a sole trader is that you are entirely personally responsible for any debts the business incurs.


Setting up a Private Limited Company

The most complicated business structure to administer is a private limited company. The advantages are that your personal liability is usually limited to the amount of equity you put into the company. Limited companies are relatively easy and cheap to set up and if you use one of the many company formation companies, such as Quick Formations, they will have off-the-shelf packages that are suitable for most small businesses. The main disadvantage of operating as a limited company is that the administration involved in running a limited company can be complex and costly.  You must file an annual return and company accounts in a specific format so you are more than likely to need the services of an accountant.  Also, any changes must be documented on the right form, which is not always easy to locate or easy to understand. You would be wise to consider another option unless you are specifically advised that a limited company structure is the best for your circumstances.


Setting up a Partnership

There are two forms of partnership arrangement:

  • A partnership, which works in a similar way to a sole trader but with 2 or more people equally responsible
  • A limited liability partnership (LLP) which works a bit like a limited company with 2 people holding an equal number of shares.


Setting up a Community Interest Company

If you’re setting up a company for community benefit and not to make a private profit you can set up a community interest company (CIC). However there are strict rules for the set up and operation of these to ensure the assets continue to be used appropriately. See our article on How to set up and run a limited company for more information on the rules for CIC business structures.


Choosing the best business structure for your small business

Generally speaking, if you’re providing goods or services that someone can sue you over if things go wrong you should consider a limited company business structure. A limited company may also have more credibility with potential investors, customers and suppliers. Note that you do not have to be a limited company to employ staff, and being a limited company has nothing to do with whether or not you need to register for VAT.

 

See our article on How to set up and run a Ltd company for the advantages and disadvantages of being a limited company.

You should take advice from a qualified accountant before deciding which is the best option for your business.


The following tax advice books are available from the Now Let's Get Started bookshop, delivered to you in association with Taxcafe:

Salary versus Dividends

Salary versus Dividends

Using a Company to Save Tax

Using a Company to Save Tax

 

Keeping It Simple

Keeping It Simple

Business structures and trading status

When you startup your own small business there are four main choices on how you structure it.  This is generally known as your 'trading status'.  The main choices for your business structure are:


Setting up in business as a Sole Trader

The simplest business structure is a sole trader. The advantages of setting up a small business as a sole trader are that it takes almost no time, effort or money, and the on-going administration is much less than for the other possible business structures. The main disadvantage of structuring your business as a sole trader is that you are entirely personally responsible for any debts the business incurs.


Setting up a Private Limited Company

The most complicated business structure to administer is a private limited company. The advantages are that your personal liability is usually limited to the amount of equity you put into the company. Limited companies are relatively easy and cheap to set up and if you use one of the many company formation companies, such as Quick Formations, they will have off-the-shelf packages that are suitable for most small businesses. The main disadvantage of operating as a limited company is that the administration involved in running a limited company can be complex and costly.  You must file an annual return and company accounts in a specific format so you are more than likely to need the services of an accountant.  Also, any changes must be documented on the right form, which is not always easy to locate or easy to understand. You would be wise to consider another option unless you are specifically advised that a limited company structure is the best for your circumstances.


Setting up a Partnership

There are two forms of partnership arrangement:

  • A partnership, which works in a similar way to a sole trader but with 2 or more people equally responsible
  • A limited liability partnership (LLP) which works a bit like a limited company with 2 people holding an equal number of shares.


Setting up a Community Interest Company

If you’re setting up a company for community benefit and not to make a private profit you can set up a community interest company (CIC). However there are strict rules for the set up and operation of these to ensure the assets continue to be used appropriately. See our article on How to set up and run a limited company for more information on the rules for CIC business structures.


Choosing the best business structure for your small business

Generally speaking, if you’re providing goods or services that someone can sue you over if things go wrong you should consider a limited company business structure. A limited company may also have more credibility with potential investors, customers and suppliers. Note that you do not have to be a limited company to employ staff, and being a limited company has nothing to do with whether or not you need to register for VAT.

 

See our article on How to set up and run a Ltd company for the advantages and disadvantages of being a limited company.

You should take advice from a qualified accountant before deciding which is the best option for your business.


The following tax advice books are available from the Now Let's Get Started bookshop, delivered to you in association with Taxcafe:

Salary versus Dividends

Salary versus Dividends

Using a Company to Save Tax

Using a Company to Save Tax

 

Keeping It Simple

Keeping It Simple

Print  
 
HMRC VIDEO - Setting up in business Minimize
Print  
 
REGISTER FOR VAT Minimize

Register for VAT when your turnover (not profit) reaches the threshold

Register for VAT when your turnover (not profit) reaches the threshold

Print  
 
FORM A LTD COMPANY Minimize

Register a company with our Limited Company formation service

Register a company with our Limited Company formation service

Print  
 
COMPANY DIRECTOR DVD

company director training dvd

The Role & Responsibilities of the Company Director. £59 plus VAT (free P&P)  or get more info

company director training dvd

The Role & Responsibilities of the Company Director. £59 plus VAT (free P&P)  or get more info

 
E MAIL HELPLINE
business helpline

Email your business start-up question and we’ll get it answered

business helpline

Email your business start-up question and we’ll get it answered

 
BUSINESS E MAIL

Don't use a personal email address, get proper business email addresses

Don't use a personal email address, get proper business email addresses

 
TAXING ISSUES Minimize

Make a note of all relevant tax return deadlines

Make a note of all relevant tax return deadlines

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MINIMUM WAGES Minimize

You must pay your staff at least the national minimum wage rate

You must pay your staff at least the national minimum wage rate

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LEGAL DOCUMENTS Minimize

Cost-effective legal contracts & documents for use in England & Wales

Cost-effective legal contracts & documents for use in England & Wales

Print  
 
MICROSOFT OFFICE 2010

Home & Business £178 +VAT incl P&P
  
Or click here to compare with the Professional edition

Home & Business £178 +VAT incl P&P
  
Or click here to compare with the Professional edition

 

 

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