Choosing the Best Business Structure for Expanding Your Business: A Comprehensive Guide

Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................2
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES:...............................................................................................................................7
Books and Journals:....................................................................................................................7
INTRODUCTION
The structure Sam chooses will have momentous connotations on the magnitude of tax he will
pay, the level of his individual liability (should the business degrade), the sum of management
activity involved and even the capability to raise funds and investment. Beginning with the
erroneous set up may bring in a lot of difficulties afterwards and might necessitate varied
proposals to sort them all. That will come at an important expenditure should he need to proceed
to an alternate framework. There exists 4 major kinds of enterprise structures in the UK and
apiece has different taxation and obligational implications for owners and stakeholders. They are
Sole Partnerships, Partnerships, Limited Liability Partnerships and Limited Company. What all

options are available with Sam for extending his business along with the recommendation for the
best will be elaborately discussed under this work.
MAIN BODY
Sam after owning a business of selling electronic parts to native garages for 8 years as a Sole
Trader, as observed from last two years believed that the business is flourishing in terms of
demand and strength of people employed which along with being beneficial for him exposed him
to various administrative difficulties. To cope up with these issues he now is determined to
expand the business. As Sam is not sure of which type of business structure he should opt for
expansion, all the basic types of structures are provided here. The advantages and disadvantages
of each type is mentioned clearly in order to make his decision more rational.
All the companies do not operate in the same way as three business structures be at their disposal
but they should precisely choose the business as it have serious implications over the capital,
investment and return from their business. Every type of business differs in status of the
paperwork , the tax payable by the owner, the manner in which profit is apportioned, and the
personal obligations if the business suffers a failure.
BASIC TYPES OF BUSINESS STRUCTURE IN UK
SOLE TRADER
Sam is operating the business from past 8 years as Sole Trader. Still the detailed analysis of what
it is along with the legal consequences is provided to make him more clear about the
technicalities of it. Most business operate as sole trader as minimal administration and set up is
required. Enrolment at Institution House is not needed although the enterprise owner should
inform HMRC. This form of business is not considered to be a judicial entity in its personal
right, accordingly the proprietor of the business has limitless liability to all debts and jural
actions. Sole Trader may be relieving in terms of requirements and formalities but the liabilities
attached with this kind of structure make it less chosen by the proprietors. Sole Trader is
managed by one person and there exists no legal differentiation between the proprietor and the
company. The liability is unlimited where all the debt payments and taxes are paid by the owner.
For example specialist services provided such as cosmetician, advocates, etc.