Type of Business entities in United Kingdom: Harshal Arun Lahamge
Starting a business in the United Kingdom requires careful consideration of the type of business entity to use. There are several types of business entities in the UK, each with its own advantages and disadvantages. Here is a closer look at the main types of business entities in the UK:
Sole Trader :
A sole trader is an individual who owns and runs a business. It is the simplest and most common form of business entity in the UK. As a sole trader, you are personally liable for all debts and obligations of the business, and you are required to file a self-assessment tax return each year.
Partnership :
A partnership is a business owned by two or more individuals who share profits and losses. Partnerships can be general partnerships, where all partners have equal responsibility for the management of the business, or limited partnerships, where some partners have limited liability and are not involved in the day-to-day management of the business.
Limited Liability Company (LLC) :
An LLP is a hybrid business entity that combines the flexibility and tax benefits of a partnership with the limited liability of a corporation. Like a corporation, an LLP is a separate legal entity, which means that the partners are not personally liable for the debts and obligations of the business.
Private Limited Company (Ltd) :
A private limited company is a separate legal entity that is owned by shareholders. It has limited liability, which means that the shareholders are not personally liable for the debts and obligations of the business. A private limited company can have one or more directors, and must file annual financial statements with Companies House.
Public Limited Company (PLC) :
A public limited company is similar to a private limited company, but it can offer shares to the public and is subject to more stringent regulations. A PLC must have at least two directors and a company secretary, and must file annual financial statements with Companies House.
Choosing the right type of business entity in the UK is an important decision that will affect the way your business operates and the level of liability you face. It is important to consult with a legal or financial professional to determine which type of entity is best suited for your business needs. By carefully considering the pros and cons of each type of business entity, you can make an informed decision that will help your business thrive in the long run.