Sole Trader, Partnership, LLP or Limited Company? (2024)

• After you’ve paid tax, you can keep all business profits.
• You have full control of how your business is run and all decisions can be made by you alone.
• Your business’s data is kept private (compared to other business typeswhere data is visible at Companies House).

• You’re liablefor any business losses.
• It can be difficult for a Sole Trader to financially fund their business ventures.
• The pressure for a business to succeed isplaced on an individual’s shoulders.

• The more partners the higher profits possibility and the easier to financially fund the business.
• A partnership allows a business’s tasks/responsibilities to be assigned to each partner depending on their skills, which takes the stress off just one person.
• Solving business problems and making decisions can be made easier as you get a selection of opinions/ideas.

• The possibility of disagreements/not being able to come to an agreement on how the business is run.
• Taxation laws say that all partners must pay their own tax, just like a Sole Trader would. Also if a partnership obtains a certain level of profits, the partnersmay be faced to pay more than they would in a limited company.

• The liability of the business isn’t down to one single person, this includes financial issues and business responsibilities.
• The flexibility of what and how much each partner contributes to the business.
• Unlimited amount of business partners.

• Some businesses/clients don’t see Limited Liability Partnerships as a credible business, whereas corporations are generally more respected.
• Partners are not legally obliged to consult with other partners when business decisions are being made, which can cause conflicts.
• The LLP Agreement can sometimes cause issues, if a partner wants a say in another business area but is not allowedto.

A Limited Company is an organisation that is set up to run a business. Unlike a Sole Trader/Partnership all of your businesses finances are kept separate to your personal finances.After payment of corporation tax, the profits are available to distribute to shareholders as dividends.

There are two types of Limited Companies:

• Public Limited Company (PLC) –Shares can be bought and sold through a stock exchange.
• Private LimitedCompany (Ltd) – Cannot buy and sell shares through a stock exchange.

• When registering a Limited Company you must register the company name with Companies House. This business identity is unique to you and will be protected from other businesses trying to use the same name.
• You have the option to offer company shares to your employees, which motivates them more and gives the chance to have a say in how the business is run.

• Bookkeeping and accounting of a Limited Company is more complex as you are required to keep accurate records as you go along and to submita range of data each year.
• Private Limited Companies (Ltd) can’t trade their shares with the public as a way to boost capital.
• Directors and Shareholders may not agree on how the business is run as well as new ideas.
• Certain information on the company, its directors and shareholders is avaiable in the public domain.