1 Which structure is best for me?
Setting up in business can be a daunting prospect. Once you have decided to take the
plunge, it is very important to decide on the best legal and taxation structure to suit your
needs. The most desirable structure will depend on your personal circumstances and the
possible options you have are as follows:
1.1 Sole trader
This is the simplest way of trading. There are only a few formalities to trading in this fashion, the most important of which is informing HMRC. You are required to keep business
records in order to calculate profits each year and they will form the basis of how you pay
your tax and national insurance. Any profits generated in this method of trading are automatically yours. The business of a sole trader is not distinguished from the proprietor’s personal affairs which is a potential pitfall because if there are any unpaid business debts, you
are legally liable to pay the value of those debts right down to your last worldly possession.
1.2 Partnership
A partnership is an extension of being a sole trader. Here, a group of two or more people
will come together, pool their talents, clients and business contacts on the assumption that
collectively, they can