What sort of company should I set up?
There are three main types of companies that you could choose to set up to run your business, sole trader, partnership or limited company.
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You’ll need to consider the type of company that best suits your business needs.
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Sole trader
Choosing to be a Sole Trader is the easy, low cost way to start trading, giving you full control over your company. The accounting is also easier & there are less statutory returns to be completed
The disadvantages of this business structure is that the company’s debts / obligations are not separated from you and are treated as your debts. Some businesses / funders do not regard Sole Traders as being as stable as a Limited Company, and may be less willing to deal with you.
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Partnership
A Partnership has the same advantages and disadvantages as a sole trader but with the added potential complication of another person or persons running the business alongside you.
A Partnership Agreement should be entered into which states the names of the partners involved, the name, purpose and place of business, details of profit / loss distribution and capital contributions. It is also a sensible idea to include clauses regarding termination of the partnership in such an agreement.
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NB If no Partnership Agreement is put in place, the Partnership Act (1980) will govern the business.
Limited company
Setting up a Limited Company separates the company from your personal affairs. Customers contract with the company rather than you which means that any debts or obligations are usually limited to the company funds. There are also potential tax advantages to a Limited Company, with the company paying corporation tax and the directors and shareholders able to withdraw money from the company by way of dividends.
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Funding may be easier to arrange as many companies / businesses believe that Limited Companies are more stable and less of a trading risk.
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Disadvantages to this model include increased administration and costs of submitting statutory returns.
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This is where I come in to help you! With professional help and support the disadvantages can be greatly outweighed by the advantages
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Please leave your details on the contact page or give me a call on 07764 484281 to find out more about how I can help