Your business can come in many different forms including:
- Sole Trader
- Partnership
- Limited Company
There are a few others but your business is likely to fall under one of the above 3 categories.
Sole Trader
This is the most simplest way to start. There is no registration costs to start up but you a liable for any debts the business runs up. This means that you could lose anything personally you own if things dont go according to plan.
You are on your own and have to make all the decisions. You do own all the profits though.
Partnership
A Partnership means one or more persons. Advantage here is that you share the risks but big disadvantage is that you also share the profits.
Limited Company
Setting up a company will involve the need of a Solicitor or and Accountant and will add to the companies set-up costs. My advice would be to start and a sole trader or a partnership if the business is starting out small with limited capital, have very little money or you have very little to lose. As your company grows I would advise incorporating your business as a limited company. If you are unsure then incorporate it from the beginning.
What We Did
When I started my business we didn't know very much about incorporating a company so we just started as a partnership. We didn't really know anything about the legalities of a company until later down the line so I suppose a Partnership seemed like a good place to start.
Because their was 2 of us a partnership was the only option. Sole Traders are exactly that. Business owners who own the business by themselves.
After year 3 we incorporated into a limited company. One of the main reasons why most sole traders or partnerships become limited is so they have limited liability. This means that if things dont go so well you can always dissolve the company and the debts of that company are not burden on your personally as the owner.
Tips from this Article
- Having started my business so young I do recommend that you do it this way. I do agree that it takes a lot longer to get a business off the ground without a lot of money behind you but it is possible. You make loads of mistakes in your early years but as long as you learn from these that is the most important thing. Remember the guy that never made mistakes never made anything.
- Let the Inland Revenue or Tax Authorities know as soon as possible after you start up that you are trading.
- Decide carefully what formal structure you want your business. This saves the hassle of changing this down the line and provides you with continuity.
