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The Right Business Structure: Pros and Cons


The Right Business Structure for You

Starting a business can be an exciting and challenging time.

Choosing the right business structure is an important decision that can affect the success of your business.

In this article, we’ll explore the most common business structures in the UK and help you understand the advantages and disadvantages of each.

Sole Trader: The Solo Entrepreneur

As a sole trader, you’ll be the sole owner and in complete control of your business.

However, with that control comes unlimited liability, meaning you’ll be personally responsible for any debts or losses.


• Easy and straightforward to set up

• Complete control over your business

• Lower administrative costs

• No restrictions on decision-making


• Unlimited liability for business debts

• Limited access to funding

• May not be seen to be as professional as other structures

Partnership: Two Heads are Better Than One

A partnership is two or more sole trades running a business together.

Each partner shares the responsibility and profits equally, unless a partnership agreement states otherwise.


• Easy and affordable to set up

• More resources and expertise available

• Improved access to funding

• Support and advice from partners


• Unlimited liability for business debts

• Potential for disagreements between partners

• Difficult to dissolve the partnership

Limited Company: Separate Legal Entity

A limited company is a separate legal entity, which means that the owners, known as shareholders, have limited liability for the company’s debts.

The company is run by directors appointed by the shareholders.


• Limited liability for owners

• Improved access to funding

• Can be more tax-efficient

• Separate legal entity for its owners


• More complex to set up

• Administrative requirements can be costly

• Directors have legal responsibilities

Limited Liability Partnership (LLP): The Best of Both Worlds

An LLP is a partnership with limited liability for the partners.

It offers the benefits of a partnership with the added protection of a limited company.


• Limited liability for partners

• More flexible than a limited company

• Can have multiple partners


• May not be suitable for all business types

• Partners still have responsibilities

• Higher costs than traditional partnerships

Which Business Structure is Best For You?: Making the Right Choice

The right business structure for you will depend on a number of factors, including the size of your business, the number of partners, and your level of comfort with liability.

No matter which structure you choose, it’s important to seek professional advice to ensure you make the right decision for your business.

If you would like to discuss the best business structure for you please contact us.

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