This week, ACCA certified accountant Anita Brook of Accounts Assist, published an interesting article on choosing the right medium for your business. It is important for entrepreneurs to consider this option carefully when starting their own business. The following options may be available to you:
Sole trader: This means that you will be the sole individual registered with HMRC in order to pay income tax etc. This option can avoid a lot of paperwork registering Companies Houses, but can be more costly and difficult to sell on.
Partnership: This is made up of between “two and twenty” people and all liability is shared between the partners. Even though it is not required by law, Anita advises partners to draw up a Partnership deed to avoid complications.
Limited Liability Partnership: LLP’s can offer great flexibility to partnerships, as it creates a company and thereby removes responsibility from the individual. However, the creation of an LLP can involve a lot of paperwork and higher accountancy fees.
Limited: A Limited Company requires directors, who have defined roles with the company. Therefore, the danger of disputes is lessened. Limited companies exist as entities separate from their shareholders, which removes them from any liability. However, there is a considerably higher amount of paperwork and accountancy fees involved.
There are obvious benefits and downsides to each of the business structures above, to find out more visit Anita’s article, and also visit Franchise Direct’s directory of the latest business opportunities.