Business structure

Guide to legal business structure

• There are no hard or fast rules to business structures, however different structures offer businesses different benefits.
• The structure of a business will ultimately define the amount of tax to be paid, how profit is taken and one’s personal liabilities within the business.

Common UK business structures

Sole trader

• Keeps all profit after taxes have been paid.
• Takes personal responsibility for any losses made.

Limited company

• The profits are owned by the company.
• It’s responsible in its own right for everything it does and its finances are separate to your personal finances.  

Partnership

• Partners share responsibility for the business.
• Partners are personally liable for any losses the business makes.

Limited liability partnership

• Limited liability partners are not personally liable for debts the business can’t pay.