Your business plan is coming together. You're raring to go. Now is the time to decide which option you are going to take for the legal status of your enterprise
By making the right choice of business model you will be able to maximise profitability whilst balancing the needs of your business associates, bank, landlord, HM Customs & Revenue, and of course your customers
Select and click on the business model below to review your options and consider the pros and cons
Sole trader
| Going solo | If you are going solo with your business you can set things off with little more than a business bank account in your name or the trading name of your business. Your legal status would be that of a sole trader. A simple and flexible way to go
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| Pros and cons... | |
| flexibility | Easy change to partnership or limited company |
| liability to third parties | Personal unlimited liability |
| documentation | None |
| tax | Personal income tax |
| accountancy | Annual trading accounts and tax return |
| banking | Simple business account |
| landlord | No special requirements |
Partnership
| Business partners | If you are entering into a business with other individuals the status of your enterprise will be that of a partnership. Partnerships can come about just by virtue of the business having commenced. You need to ensure that the working relationship between the partners, eg in relation to capital input, profit share and retirement, is correctly provided for and the drawing up of a proper partnership agreement between the partners is strongly recommended
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| Pros and cons... | |
| flexibility | Adaptable model. No obstacle to switching to limited company |
| liability to third parties | Partnership and personal unlimited liability (partners liable "jointly and severally") |
| documentation | Partnership agreement |
| tax | Partnership assessment, but income tax due personally by individual partners |
| accountancy | Annual accounts, partnership and individual tax returns |
| banking | Partnership business account |
| landlord | May require partners to guarantee obligations as individuals |
Limited company
| Incorporation | The option of incorporation as a private limited company is available whether you are going it alone or proceeding with other associates. A limited company is a separate legal entity, the workings of which is dictated by the Companies Acts regime. This important distinction will inform your decision on this choice of option. The officers of the company are the directors (and secretary) you appoint. The shareholders are those (including directors) who may put money into the business. The administration of the company is governed by the memorandum & articles of association. Whilst a number of quick company set-up services may be available, care and attention to detail using Blair Cadell's cost-effective tailored company formation package will undoubtedly be a beneficial step
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| Pros and cons... | |
| flexibility | Inflexible statutory regime for incorporation (and exit) |
| liability to third parties | Liability limited to company assets (subject to regulation) |
| documentation | Company formation package. Company books and ongoing record keeping |
| tax | Separate corporation tax regime |
| accountancy | Annual audit; Companies House and Corporation Tax returns |
| banking | Full company business account |
| landlord | May require directors' personal guarantees |
Blair Cadell can advise on all methods of business start and set up including related tax and accountancy services