Business Types

It is very important to review the legal structure of your business and to continue to review the structure throughout the life cycle of your business. The structure from when you first start trading may not be suitable further down the line. You are not restricted to retaining the initial business structure throughout the whole of the business life. Here at Catherine A Williams Ltd we continually review our client's position to ensure the business structure is right for them.

Sole Trader

A Sole Trader is the simplest form of business structure with no legal distinction between the owner and the business. All profits are taxed as income and reported on an annual basis via your Self Assessment Tax Return. There are many advantages of being a sole trader which attracts individuals to adopt this structure including;

You are the decision maker and retain control of the business
Operating as a sole trader is relatively easy and inexpensive
You do not need to register your name - you can trade under your own name or chose another name for the business
There are fewer reporting requirements
It is easy to change the business structure if you later expand and a sole trade structure is no longer suitable.

You do however need to consider the main disadvantage whereby you are personally liable if something goes wrong. The success or failure of the business is ultimately your responsibility and you will become personally liable for any losses the business makes. Sole traders can also find it more difficult to secure funding from traditional sources as they are viewed to be riskier than other business structures. Generally sole traders do have low start up costs therefore funding requirements may be minimal.

How can we help?

We are able to provide detailed accounts in a format suitable to the nature and size of the business/industry for sole traders. Whether you are already running your own business or looking to go self employed, we can guide you along the way. We can assist in ensuring accounts comply with both accounting and HM Revenue & Custom requirements and offer support to help you grow your business and achieve your business aspirations.

Partnership

A general business Partnership is a business relationship between two or more persons carrying on a business with a common view to making a profit. You and your Partner(s) will personally share responsibility for your business and profits will be split in accordance with the Partnership agreement. Partners are then taxed on their share. Similarly to Sole Traders, Partnerships are relatively easy to manage and run and there is an increased potential to raise finance. One Partner is required to be appointed as the 'nominated Partner' who maintains responsibility for managing the Partnership returns and record keeping. There are of course disadvantages to operating as a general business Partnership as each Partner is liable for any debts of the business and you need to also consider the potential for a Partnership disagreement and possible breakdown in the relationship.

It is worth noting that there are different types of Partnerships each having different levels of financial liability for the Partners involved and different rules apply such as Limited Partnerships and Limited Liability Partnerships.

If you are considering venturing into a new Partnership or are already well established, Catherine A Williams Ltd could help to support you to enable your business to flourish.

Limited Company

Setting up a Limited Company is known as incorporating. Companies must register with Companies House in accordance with the Companies Act 2006. As a Limited Company the business is owned by the shareholders but the day to day running is managed by the director(s). Often in small owner managed businesses you can be both a shareholder and a director. There are many advantages to being a Limited Company including:

It is relatively easy to incorporate a Company
Members/ Shareholders liability is limited to the contributions they make/invest in the Company. The Company is a separate legal entity providing peace of mind to some individuals
Tax efficiency can be improved when reviewing the extraction of funds from the business. Tax Planning is very important.
It is easier to grow the Company
The Company will survive the death of shareholders and Companies can potentially be sold

Disadvantages to consider;

Companies have additional reporting requirements
Increased levels of record keeping are required
Companies tend to be more expensive to operate compared to other business structures

Company accounting requirements are generally more complex, Catherine A Williams Ltd can help take away this burden and can provide you with tax efficient advice.

Other type of business

We are not limited to the above core business structures, we also have experience of working with other business types including charities, clubs and associations and community interest groups all of which have different accounting needs. Chosing the right structure for your charity depends on who runs the charity, how it will operate and what it can do. Charity law has developed over time so there are now more options available. Whether a charitable company, charitable incorporated organisation, charitable trust or unincorporated charitable association, we can help ensure you meet regulatory requirements. Clubs and associations face similar issues each with their own specific requirements. We can offer a tailored approach to meet these needs.