As a sole trader you are running your business on your own.
The pros are that you can keep all of the business profits after you have paid tax and that there is very little financial reporting required. Its quick and easy to set up as a sole trader.
The main con is that if something goes wrong you are solely responsible financially i.e. any business debts will be your personal debts.
Depending on the type of business you are running, it could be considered that forming as a sole trader is less credible. Some business do not use the services of a sole trader.
If you have any questions about choosing the right business structure, please contact us for further information.
When you start your business you need to decide on the right legal structure.There are different options to choose, however the main three that startups consider are:
So which option is right for you? There are pros and cons for each and implications you need to consider.
Here we will take a look at each, so that you can make an informed decision.
A partnership is going into business with one or more partners.
The pros are that you share management, profits and responsibility of the business. There are less legal and administrative confines of a limited company.
The main con of this structure is that if there is a break of trust in the partnership it could be difficult.
All of the cons of a sole trader also apply to setting up as a partnership except they are shared.
A limited company is an organisation that you set up to run your business.
The main pro of this type of business structure is that the company's finances are seperate from your personal finances. Should anything go
wrong you only lose the money you have put in.
As a limited company your look credible to your customers and suppliers.
The cons are that there are administrative and regulatory demands and that your annual accounts and financial reports will be publically available.