There are various legal structures available when setting up a company. There are various pros and cons to each structure whether setting up as limited company, business partnership or sole trader.
Having conducted your market research and having a solid business plan in place, forming your business structure will be the next step.
Buying a business?
Some entrepreneurs may choose to buy a business as this may minimise the risk but still generate enough return on your investment. Restaurants, pubs and coffee shops are all popular options that are readily available on the market. Many of these businesses may come with already established markets and customers.
It can be very successful to buy a business which can include a good product, established markets, right location etc. Maybe an existing business just needs a new lease of life or new direction, but the foundations are already in place.
Buying a franchise
This is another option available when starting a new business. There are various franchise options available so ensure you carry out the necessary research. The benefits are obvious such as benefiting from an established brand whilst still being your own boss. This option ensures, branding, marketing, sales and promotions and an already established customer base are already in place.
Start an online business
One of the quickest ways to start a business is online especially with so many business ideas available. The growth in online sales has been phenomenal over the last 10 years. With no costs for premises, starting a business online can have relatively low costs with the ability to trade 24 hours a day. With people buying online all over the world, you could be selling your products why you sleep. With digital marketing companies in hot demand, you will be able to develop online marketing strategies to help you reach your customers. Many small business owners even take online marketing responsibilities themselves with so many tools out there to help you. It still comes down to having a good product to sell. eBay and Amazon are other marketplaces where you can promote and sell your products.
Legal Forms of business
Whatever type of business you start, it will need to have a legal registration and status. This might include sole trader, limited company or partnership. Setting up as a sole trader is one of the quickest ways to set up a business. Visit the HM Revenue & Customs and simply register your business. This formation normally means you will pay less tax as you will only pay tax on your profits once your running costs have been deducted. However, should your business fail, you will be personally liable for all debts, your assets such as your home would be at risk. Some small business owners who start up as sole traders then might turn the business into a limited company.
Setting up a limited company
If you decide to set up a s limited company, personal financial liability is removed. Company formation which is the process of setting up a limited company is also known as incorporation. New companies must be registered at Companies House. Setting up a limited company will have more responsibility regarding management and reporting as well as increased operating costs.
The other legal form for setting up a company is to enter a business partnership. You could start a business. Setting up a limited liability partnership will mean the partnership itself is liable for any debts rather than the individuals. If the business is not set up as a limited liability partnership, should the business fail, bother partners will be liable for each other’s debts.
It is important to take the time to review the different forms of legal structures available when starting a new business. Setting up as a sole trader tends to be a popular first choice as it will keep your costs down but also provide you with the flexibility to change your business to a limited company once your business grows.