Where should I start in selecting a business structure? solicitor scotland
Whether you intend to restructure your present company or launch a new one, the structure you decide upon is important. You should take into account several elements including the kind of company you run, your goals and the funding source. Three of the most often used structures that offer a useful basis for decision-making are examined in this article.
Sole trader
Government figures show that last year sole traders accounted for almost 56% of all UK companies, the most often used kind of business structure.
Starting small can be perfect for you and help you save time and money by avoiding the setup and ongoing expenses of an incorporated company. Unlike other arrangements, your company does not have to be registered or publish information at Companies House; you are in control of it and keep all the profits (subject to tax).
One big disadvantage, though, is that all of the debts and losses of your company will personally affect you. This is true since you own all of the company’s assets and it lacks distinct legal personality. You could want to look at one of the choices if you want to avoid this liability.
Private business limited by shares
Another popular kind of company structure with several advantages for start-ups is a limited-by-shares company.
Unlike a sole trader, a company has a legal identity, therefore separating it from its directors and owners. Under a private company limited by shares, this implies that none of the debt of the business falls personally on any one shareholder. This is given they have not personally guaranteed anything regarding the company’s liabilities, say to a bank that has lent money to it. Although this is more usual in the not-for-profit and charitable sectors, a firm can also be restricted by guarantee.
Although company directors administer the business on behalf of the owners, you might be both. The directors owe the company duties outlined in the Companies Act 2006 and common law.
