“I met Jane at a network event. Sometimes you feel a little battered by sound bites at these dos, but Jane’s honest, personal and clearly knowledgeable approach was great. Working with a national charity at the time, Jane helped me to refine my service agreement and is now my first port of call for legal advice. Jane takes time to ensure you understand the issues in hand, they’re then dealt with promptly and her fixed fee means no qualms about how many times I need to call her - fantastic!”
Tom Wycks, TW Digital Media
If you have never owned your own business then make sure you take advice from:
Choose a solicitor who is genuinely interested in you and your business. If he or she asks you a lot of questions about your business then this is a good sign. Another good sign is if they ask you to come and see them for a general chat about your business which is at no cost to you, just so that they can get a good ’feel’ for you and your business.
You have to decide in what ‘legal’ capacity you are going to trade. If there is just you then you could trade as:
If there is more than one of you then you could trade as:
How do you choose?
There is no right or wrong answer to this question – it is up to you but we would strongly suggest that you make the decision only after speaking with your solicitor, your accountant and your business advisor. This is a really worthwhile exercise and is likely to save you money in the long run.
Pros - this is the simplest way for you to trade. There are no costs involved in setting up a business. All the affairs of your business are private and are not shown on any public register.
Cons - the downside is that you will always be totally liable for your business. If anything goes wrong you will pursued and sued personally. In a serious case this could lead to you losing everything including your home.
Pros - as a holder of shares in a company and as a director you will not, in most cases, have personal liability for the losses of the company and claims made against the company. It is also often easier to value a company for sale and to sell it and easier to exit from a company than from a partnership structure. Sometimes there are tax advantages to trading as a company and your accountant will be able to do this calculation for you. It is also a more flexible structure to enable you to invite investment into the business.
Cons - there is a small cost in setting up your new company. Each year there is a small cost in filing the company’s annual return at Companies House. There are also the costs of having accounts prepared to a statutory standard. There is little privacy regarding the company’s affairs because all the details of the directors, shareholders, borrowings (if security is taken) and accounts are exhibited for public scrutiny on records at Companies House.
Pros - the only serious advantage in trading as a partnership is that the affairs of the partnership are private since no information about the partnership is recorded on any public record. It is also simple to set up.
Cons - all of the partners have personal liability for the losses of and claims against the business. In the same way as a Sole Trader this can ultimately lead to you losing everything in order to meet the liabilities of the business in a serious case. If there is a dispute between the partners it can often be a long, stressful and expensive process to extricate a partner from the business. Third party investment is impossible except by way of a loan from that third party, which makes business development and growth more difficult. You will be taxed on your share of the profits of the business and not on the actual amount that you receive as drawings. Sometimes this may not be the most tax efficient position
These are a hybrid arrangement between a partnership and a company.
Pros - as a member of an LLP you will not have personal liability for the losses of or claims against the LLP. An LLP is quite easy to set up.
Cons - Information about the LLP is not private. All information about the LLP and its directors and members is on public record. The LLP must file its accounts on the public record at Companies House. It will be taxed as if it is a partnership which may be less advantageous than trading through a company structure.