When setting up a new business there are many different aspects to think about and if you haven’t had experience with starting a business before, it can be very complicated. That is why hiring professional chartered accountants London or in your local area before you even start the business is recommended. As well as providing advice on finances and a business plan, a chartered accountant can help you to decide which trading structure your business should have. This is an important decision as it can affect the type of property and contracts the business can have and the amount of taxes they pay.
Making a business a limited company is a good option for certain types of businesses. However with this format there are lots of rules that must be followed with accounting and tax.
A sole trader format of a business is the easiest to set up and begin trading. It is important however that the person running the business follows the rules of this trading structure such as paying national insurance and setting up VAT. In this trading structure the individual responsible for the business will be personally liable if the business comes in to debt.
More than one person running a business will mean that it is a partnership. With this type of business format, one partner is able to sign contracts and make agreements that are bound for all of the partners, plus all partners are liable for debts of the others. There must be a strong trust between partners when entering in to this type of trading structure.