Deciding how you structure your new business involves key decisions with important legal and financial implications. Forming a Limited Company or using an alternative business structure will have significant consequences for your costs, responsibilities and potential liabilities. You may also need to consider issues such as whether to buy an existing business, take over a franchise or commence the business from scratch. Your business name will be important to you in the marketing of your business. If you are involved with other owners or business partners, a shareholders or partnership agreement is vital to ward off possible future disputes.
A Limited Company?
Although many businesses appear instinctively to be appropriate for a Limited Company set up, significant costs and administrative burdens can result from that arrangement. Using a sole trader or partnership set up can in fact be more straightforward. Partnerships are increasing turning to limited liability partnership status (LLP) which is an attractive alternative to a standard partnership for the reason of limiting the partners’ liability. LLP status also has advantages over a Ltd Company status in terms of possible reduction in administrative cost. However, a Ltd Company can offer attractive taxation benefits, particularly for small businesses who wish to regulate when and how their tax is paid.
Therefore the key issues are:
- What is the best tax treatment for you and your business? and
- To what extent can you limit your personal liability if things go wrong?
Early advice is vital to ensure that you do not go down the incorrect route.
To arrange an appointment to discuss with one of our specialist lawyers, please contact the Company & Commercial Department partner Paul Prikryl.
Telephone: 01296 596969