Starting your own business can often be a stressful and confusing time, and even deciding how to structure it can be tricky.
Here’s a handy guide to the different types of business structure, by Daniel Martin from the Harborough branch of Edward, Hands & Lewis solicitors.
You would be running the business as an individual, which means you’ll be treated as self-employed and you can keep all your business profits – once taxed!
The downside is it also means you’re solely responsible if anything goes wrong.
You’re personally responsible for any losses, bills for things like stock or equipment, and keeping records of your sales and spending.
You and your partner share responsibility.
You can share all your profits and each partner pays tax on their share of the profits.
It’s recommended that you have a partnership agreement drafted to manage the running of the partnership and, ultimately, the ending of the partnership.
You’re personally responsible for your share of losses and bills for things you buy like stock or equipment.
An organisation that you can set up to run your business.
It’s responsible in its own right for everything it does and its finances are separate to your personal finances.
Any profits are owned by the company.
It can then distribute profits to its shareholders, whose responsibilities for the company’s financial liabilities are limited to the value of shares that they own.
Spark Harborough column by Daniel Martin.
Mr Martin is a solicitor with the Harborough branch of Edward, Hands & Lewis, which is one of supporters and sponsors of Spark Harborough.
Its town branch is based at Unit 1B, Stable Block, Union Wharf, Harborough, LE16 7UW. Call 01858 434022or email firstname.lastname@example.org.
For more details about Edward, Hands & Lewis, visit its website at www.ehlsolicitors.co.uk.
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