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Choosing the Right Legal Structure for Your Business
You must choose a structure for your business. This structure will define your legal responsibilities, like: the paperwork you must fill in to get started the taxes you’ll have to manage and pay how you can personally take the profit your business makes your personal responsibilities if your business makes a loss You can change your business structure after you’ve started up if you find a new structure suits you better or saves you money.
The main types are:
You can form an ‘unincorporated association’ if you’re setting up a small organisation like a sports club or a voluntary group and don’t plan to make a profit.
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- sole trader
- Limited company
- Business partnership
You can use other structures for businesses that help people or communities, eg ‘social enterprises’.
When you set up your own business as a self-employed sole trader or in a partnership, you need to register for Self Assessment with HM Revenue & Customs (HMRC). HMRC will set up the right tax and National Insurance records for you and can help you understand what you need to know about tax and help you to get it right. If you are late in telling HMRC, you may incur a penalty. Not paying your National Insurance contributions puts your right to benefits at risk. You can find the form you need to register a new business for Self Assessment if you’re a self-employed sole trader or in a partnership at www.gov.uk/new-business-register-for-tax There are a number of online seminars to help you understand the different areas of starting a business. Visit www.hmrc.gov.uk/webinars/index.htm to see HMRC’s free online seminars (webinars).
