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Business Types

Sole Traders

Being a sole trader is the simplest way to get started in business. Once you have informed the government agencies of your intentions to go self-employed, you can start trading right away (subject to any specific licenses you might require in your line of work).

 

As a sole trader, you can quickly adapt to changes in your business with minimal bureaucratic procedures required and you have complete control over your business and accounting affairs. However, a sole trader is also ultimately responsible for any liabilities should anything go wrong. It is worth spending time considering which company set-up format is best for you.

 

Partnership

In a partnership, two or more people share the risks, costs and responsibilities of being in business. Each partner is self employed and takes a share of the profits. Usually each partners shares in the decision making and is personally responsible for any debts that the business runs up.

 

Unlike a limited company, a partnership has no legal existence distinct from the partners themselves. If one of the partners resigns, dies or goes bankrupt, the partnership must be dissolved although the business can still continue.  < return to business types

 

A partnership is a relatively simple and flexible way for two or more people to own and run a business together. However partners do not enjoy any protection if the business fails.

 

Limited Liability Partnership (LLP)

An LLP is similar to an ordinary partnership in that a number of individuals or limited companies share in the risks, costs, responsibilities and profits of the business.

 

The difference is that liability is limited to the amount of money they have invested in the business and to any personal guarantees that are given to raise finance. This means that members have some protection if the business runs into trouble.

 

Limited Company

Limited companies exist in their own right. This means the company finances are separate from the personal finances of their owners. Shareholders may be individuals or other companies.

 

They are not responsible for the company’s debts unless they have given guarantees (of a bank loan, for example). However, they may lose the money they have invested if the company fails.

 

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