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UK Business Categories |
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Once you have formulated a business concept that you feel will be successful, you need to decide what type of business your going to be there are pros and con's to each type of business type. The Sole Trader: The most simplistic business type is known as the sole trader, in this business category, this is where you are basically running a business on your own, the business is in your name and you are responsible for all the business debts. In essence a sole trader is the easiest form of business to set up, but you have to be aware that if the business make a loss you are the one person responsible for its debts. In general the main legal requirement to set up a sole trader business would be to ensure your business name does not conflict with any existing businesses. The main considerations would be, if you were to operate your business from say a unit or shop, then you would have to make sure you have insurance liability certificates, and the necessary fire & safety certificates, in place. A Partnership: The partnership is very similar to a sole trader, except it can be formed either verbally or in a written contract where two people agree to be the owners of the business. Again it's very easy to set up but you have to remember that even if one partner makes the business work and the other makes a large loss and disappears you will be liable for the business debts. Often you can have a partnership where one of the members is called a 'sleeping' partner in the sense that the contribute some of the capital towards the business but do not take an active role in the day-to-day running, just taking a slice of the profits. Again this type of business will also require that you trading names do not clash and the necessary certification is raised. A Limited Partnership: A limited partnership is very similar to a normal partnership arrangement, except that one partner can have a limited liability, this means that they will only be liable for whatever they invested into the business and not all it's debts. This means the other partner becomes liable for the business debts. A Private Limited Company: A limited liability company can be formed by anyone, as long as there is basically one person who is willing to be the company director and another person who is willing to be the company director. Rules for formation of a limited company are discussed below. A Public Limited Company: This type of business is generally derived from a limited company which has been in business for several years and usually needs more capital to expand, as a result it will form a public limited company where it's shares are advertised and traded on the stock exchange. Don't expect to become a Plc for at least 5 years. Most new high-tech firms decide to form a Plc much sooner. However a lot of these will run into stock exchange valuation problems, as they will have histories which the stock brokers treat erratically one minute their good the next bad. |
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