Starting a business can be rewarding, however you need to be made aware of the potential risks and what you will need to have in place to get your business up and running.

Business structures

When setting up a business you will need to consider what business structure you are going to choose, as each comes with different levels of liability.

The three main business structures are:

  • Sole trader
  • Limited company
  • Partnership

If you are just starting out you may want to be a sole trader, however it comes with risks as you are fully legally responsible for the business. The most common business structure is a limited company, which limits the liability of a shareholder, however it consists of filing lots of paperwork for the business. This article is based on the most common business structure, a limited company, the process for the other structures is similar.

Setting up a company is easy, it costs £12 to incorporate your business on Companies House, however it is best practice to speak to a solicitor to get basic advice about the best way to structure your business. They can also incorporate the business for you with Companies House on your behalf.

Initial considerations

At this stage, it is recommended to get an accountant to look at your business plan and help with your business finances, tax returns, annual accounts, and potentially initial financing opportunities, such as a start-up loan. Your solicitor will be able to recommend a good accountant for you.

Ownership structure

The next consideration is who are you going to run the business with? It may be with your family or friends. If you have an outside investor on board, you may be required to set up an investment agreement, which you may wish to obtain legal advice to ensure you understand the agreement fully before signing the document.

This is a brief overview of the initial considerations when starting a business, if you need legal advice for any of the above, contact us on 01782 646320 and we can have a thorough discussion about your business and how we can help you achieve your business aims.

Our Corporate Team

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