How Big Do You Want Your Business to Be?

Types of small businesses
There are three most important structures: the sole trader; partnerships and limited companies.
The sole trader means one person has total control over the way the company is run. Traditionally they are small in size with only a small number of employees. The main advantage of being a sole trader is you make all the decisions and get all the profits. The disadvantage is you don't have anyone to share the trouble, which means it can be a very lonely existence.
You also have limitless responsibility which means any business obligation can be met from your own personal wealth if the venture fails. The proceeds will then be scattered proportionately connecting your creditors per the ratio stated in the court order.

Partnerships are the next type of business structure. The advantages are having someone to share the problems which mean you can give each other mutual support. You will also be able to tap into each other's occurrence and knowledge. However, it is not always rosy. There is less independence and more potential for friction if partners do not agree on an issue. Decision-making can frequently be slower with more people to ask and more to share the profits. Partnerships can also be formed between two business individuals as well as between an individual and a business enterprise. The obvious profit of partnerships is the shared accountability.

Limited company, there are two forms of limited company - those whose shares are publicly traded on the stock market and the privately owned. The term limited refers to limited responsibility, which means the business is its own legal entity and the owners are only liable for the amounts they invested. Their personal wealth cannot be touched. To form a limited corporation you need to register it at Companies House, have a company name and a UK address which will be your registered office.

When it comes to organizing your small business, you can decide any of these legal business entities; but if you really want to succeed, you should speak with your accountant to properly assess the pros and cons of each one.