What type of business structure will you use? Choosing your business structure is an important decision, so you need to investigate each option carefully.
When making your decision, consider whether your activity is a business, or a hobby. Remember that to be able to claim business deductions you must be carrying on a business. Other factors to consider are the cost of set-up, the taxation implications, the expense of ongoing administration and your personal financial liabilities.
There are a number of structures that you can choose from when creating your business. The four main types of business structures commonly used by small businesses are:
- Sole trader: an individual trading on their own
- Partnership: an association of people or entities running a business together, but not as a company
- Trust: an entity that holds property or income for the benefit of others
- Company: a legal entity separate from its shareholders.
When deciding upon a structure for your business, choose the one that best suits your business needs and remember that there are advantages and disadvantages for each.
Obtaining legal or other professional advice can help you understand your own particular circumstances.
This is where you need us, a professional business adviser.