Your business structure will be driven by financial, as well as legal considerations, but the most conventional structures are:
- Sole Trader
- Limited Liability Company
To ensure the potential for the business is maximised, the structure and operation of the business itself should be carefully planned alongside the core idea. Having a clear structure will make the business more attractive to investors and optimise its value.
In Northern Ireland the most common type of company is a Limited Liability Company (a private company limited by shares). The costs are low for incorporating this type of company, particularly when weighed against the potential benefits.
This structure is a simple way to protect personal assets – unlike a Sole Trader or Partnership, the Limited Liability Company does not put your personal assets at risk. A Limited Liability Company is a separate legal entity which will hold the business assets in its own right. Its liability is limited to the amount paid for shares in the company (often as little as £1.00 at the start).
A Limited Liability Company is a separate legal entity and is the owner of the business assets. It is a credible and trusted business structure which provides both continuity and flexibility for growth, making it attractive to potential investors.
Although relatively inexpensive to set up, there are ongoing administration requirements such as keeping a register of shareholders, and filing annual accounts and a confirmation statement with Companies House every year.
A company must also complete a Company Tax Return each year for HMRC. The directors of a company owe duties to the stakeholders, including a duty to act in the best interests of the company. We can advise on the extent of these duties, particularly if there are a number of company stakeholders.