Company Structure is often misunderstood, as well as overlooked until it’s too late. The structure of your business is central and vital in terms of ownership and management. If you have this sorted properly at the beginning of a new venture it is going to be set up with a much higher chance of succeeding, with less interference due to disorganisation as a result of a clean layout to follow.
On top of this, the correct ownership construct, will ensure that all profits are allocated to the right people, and any disputes and issues that come as a result are kept to a limited minimum.
Legal responsibilities are defined through this process, this governs any paperwork that you will need to fill in, taxes that will need management and disbursement, how you access profit from the capital which your company makes, and responsibilities which fall directly onto you if the business does make a loss. The business structure can change after you have started up, and you may find that this new structure suits you much more appropriately.
What kind of business are you running?
Is it going to be …..
A) Sole Trader?
You work for yourself, you’re classified as a self-employed sole trader, and that’s still applicable if you’ve not told HM Revenue and Customs (HMRC ) As a sole trader, you are running the business on an individual basis, you keep all profits from the business (after taxes). You are able to employ staff however, the name ‘sole trader’ means your responsible for the business, not necessarily that you must work alone.
B) Limited company?
These are set up to run your business, responsible in its own right, everything it does and finances are still separate to your personal finances. Any profit that it makes is owned by the company (again, after it pays its tax). Corporation tax – the company can dish out profits following on from this.
C) Business partnership?
You and your business partner (or more than one partner) personally share responsibility for your business. Profits can be shared between all partners. You are personally responsible for your allocated share. A nominated partner must send a partnership Self Assessment Tax Return every year.
It can be intimidating for any kind of company when it comes to correct company structure but knowledgeable accountants like Salisburys Accountants in North Wales & Hale, Greater Manchester can help. They have advised many clients on appropriate structure for both incorporated and unincorporated businesses for years.
