Studio Brief 2
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Beath's Task was to look into the types of businesses and she shared back a lot of information which helped us decide what we wanted to class ourselves as. I did a smaller amount of research just to introduce myself to the company types for my own information and education.
Her full blog post on the topic is here: Beth Taylor PPP - Taking Care Of Business Research
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
You can change your business structure after you’ve started up if you find a new structure suits you better.
- Your personal responsibilities if your business makes a loss
Types Of Company
1. Sole trader
If you start working for yourself, you’re classed as a self-employed sole trader - even if you’ve not yet told HM Revenue and Customs (HMRC). As a sole trader, you run your own business as an individual. You can keep all your business’s profits after you've paid tax on them. You can employ staff. ‘Sole trader’ means you're responsible for the business, not that you have to work alone. You're personally responsible for any losses your business makes.
2. Limited company
A limited company is an organisation that you can set up to run your business - it’s responsible in its own right for everything it does and its finances are separate to your personal finances.
Any profit it makes is owned by the company, after it pays Corporation Tax. The company can then share its profits.
3. 'Ordinary' business partnership
In a business partnership, you and your business partner (or partners) personally share responsibility for your business.
You can share all your business’s profits between the partners. Each partner pays tax on their share of the profits.
4. Limited partnership and limited liability partnership
Your liability for business debt differs depending on whether you’re a limited partnership or limited liability partnership (LLP).
You can share all the business’s profits between the partners. Each partner pays tax on their share of the profits.
5. Unincorporated association
An ‘unincorporated association’ is an organisation set up through an agreement between a group of people who come together for a reason other than to make a profit, eg a voluntary group or a sports club.
You don’t need to register an unincorporated association, and it doesn’t cost anything to set one up. Individual members are personally responsible for any debts and contractual obligations. If the association does start trading and makes a profit, you’ll need to pay Corporation Tax and file a Company Tax Return in the same way as a limited company.
Information From: Gov.uk/business
Conclusion:
We ultimately chose a limited partnership and limited liability partnership. We all own equal percentage amounts and take responsibility for our actions on rotation. This also means that the account management is rotated. We all have the ability to sign cheques etc.
