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Summary table of business structures

Our commercial solicitors are able to advise on the different types of structure available.

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Summary table of business structures

 

Below is a summary of the business structures:

Business Structure Liability  Expense Management Raising Finance
Company Limited liability – no personal liability unless you have personally guaranteed the debt of the company There is a cost of setting the company up and maintaining the registration.  Annual accounts have to be filed online at Companies House which incurs an annual fee. The Companies Act 2006 sets out how a company is to be run.  These must be adhered too. Investors and lenders tend to prefer company structures as a way to invest in the business.  Shares can be issued to investors.  Lenders will increasingly look to director/shareholders to provide personal guarantees for the company.
Partnership You are personally liable for all the debts of the partnership, with each partner being jointly and severally liable. There is no set up fee, and the general costs of running the partnership is lower as there are no annual accounts to be filed. Unless there is a partnership agreement formally in place, there is much greater flexibility in how the business is run. It is very difficult for an investor to invest in a partnership.  An investor would have to become a partner and this in itself may cause problems for the management of the business.Any loan will be in the individual names of the partners.
Limited Liability Partnership You have limited liability. There is a cost of setting the company up and maintaining the registration.  Annual accounts have to be filed online at Companies House which incurs an annual fee. There is legislation in place to govern how an LLP is governed. Like a company, investors prefer an LLP structure as it allows the investor to have the same limited liability.
Sole Trader You have personal liability. There are very few costs, if any, in setting up as a sole trader. All decisions can be made by you.  There is a great degree of flexibility. Any investment or lender will look to loan to you directly.

 

 

 

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