There are a number of ways in which a business can be carried on. A business may be a:

• Sole Trader
• Partnership
• Limited Company

Sole Trader

A sole trader is the sole owner of his or her business, and has sole control over the business. The Profits of the business belong solely to the Sole Trader, as do any losses. They are personally liable in law for all the actions and debts of the business and there is therefore a risk of personal bankruptcy. The profits of the business are taxable on the Sole Trader as their own income.

Partnership

In a Partnership, the business is owned by the partners in the proportion they have agreed upon in a partnership agreement. The profits are likewise shared among the partners in an agreed proportion, with each partners' share of the profit treated as their income for tax purposes. Each partner is personally liable for the losses and debts of the partnership, and like a Sole Trader, there is a risk of personal bankruptcy.

Limited Liability Partnership

A limited liability partnership is legally similar to a company. It is administered like a company in all aspects except its taxation. In this, it is treated like a partnership. Therefore you have the limited liability, administrative and statutory obligations of a company but not the taxation and national insurance flexibility. They are particularly suitable for medium and large-sized partnerships

Limited Company

The owners of a limited company are its shareholders, and a company is deemed to be a separate legal entity from its owners. No shareholder is personally liable for the company's debts and the risk of personal bankruptcy is reduced. A company's profit belongs to its shareholders and is paid out to them as dividends. A company is managed by its directors, who are paid employees of the company appointed to run the company on behalf of the shareholders. A shareholder can also serve as a director. One potential drawback of a limited company is the loss of control if you own less than 50% of the issued shares.

If you choose to form a limited company, then your new company will need to be set up and registered with the Companies' Registry Office. We have set up companies for many clients in the past and can help you with your new company if you choose to go down this route either when your new business starts up, or at a later stage in your business's development.

An important factor to consider when choosing a Business Structure for your business is Taxation.