Choosing a Business Structure or Entity
The choice of structure or entity will be determined by the individual requirements those setting up the business.
The types which are commonly used are: limited company, partnership, limited liability partnership and a sole trader. Some of those above (for example, soletraders and partnerships) have some similarities, whist others such as limited companies have some very distinct features.
Strong consideration should be given to the choice of business structure or entity. Although it can be changed at a later date, selecting the right one from the outset can result in less disruption once trading has started. Using the services and advice of an accountant might be advisable at this stage.
Considerations for Selecting a Business Structure
Ease of starting up
Traditionally commentators have always suggested the setting up a business as a sole trader was by the easiest structure to adopt. However, with the widespread growth of electronic company formations, the gap in terms of simplicity has certainly been closed.
Many would still suggest that starting business as a sole trader is still the most straight-forward requiring notification to Customs and Revenue and maintaining basic books to record the business; transactions. In addition there is the preparation of tax returns (which some may already do through their employment).