Setting up your business
What are the practical steps in setting up my business – should I be a sole trader, a limited company, a charity or something else entirely?
Limited companies and sole traders are by far the two most common legal structures for businesses. Partnerships, limited liability partnerships and social enterprises make up most of the rest. Choosing which is right for you depends on your business ambition and how you plan to operate. The resources below help you to learn to avoid common mistakes, understand the benefits and risks of different legal structures, and also consider questions such as whether you need an accountant.
Legal structures
Evaluate the pros and cons of becoming a sole trader versus a limited company, plus an introduction to other business forms
from Startups.
WHAT? An unbiased and thorough analysis of the two main types of business structure, with an overview of other legal forms. Beware of comparisons by some accountancy firms and business formation companies that have a vested interest in pushing founders to limited company status.
WHEN? You’re planning your business and are clear on its objectives and growth ambitions and now need to choose the right structure to match
WHY? Decisions you make now will affect your growth, ability to employ and tax
OTHER RESOURCES?
>> A helpful range of articles from Bytestart including:
Advantages of a limited company
Advantages of being a sole trader
>> A short comparison article on limited companies versus sole traders from SME Web
>> Key differences between sole traders and limited companies from Caroola Accountancy
Community Interest Companies (CICs)
Get to grips with the pros and cons of operating as a Community Interest Company (CIC)
from Inform Direct
WHAT? An article outlining the pros and cons of CICs over other forms of legal and organisational structure
WHEN? You’ve decided you want your business to have a social purpose, but aren’t sure if you want to set it up a charity or a business or something in between
WHY? Setting up a social enterprise affords tax benefits and greater access to grant funding, but does mean profits for shareholders are sacrificed
OTHER RESOURCES?
>> Helpful CIC guide from The Guardian
GOV.UK information helpline
Don't forget that the national small business helpline is there to help answer your questions, and it's free
from GOV.UK
WHAT? The helpline is available Monday to Friday from 9am to 6pm. It's a free service but check call charges using the link on the webpage.
WHEN? You can't find the answer online to a key business question
WHY? You need help or advice on setting up, incorporating or operating your business
OTHER RESOURCES?
>> Frequently Asked Questions on setting up a company from Startups.
Setting up
Explore this step-by-step guide on setting up a business
from GOV.UK
WHAT? An article with comprehensive up-to-date guidance, assistance and advice on business formation for all types of legal structure, plus information on other related licenses and regulations
WHEN? You’ve decided to set up your business and need a comprehensive guide to everything you need to do, regardless of whether you’re intending to do it yourself
WHY? Enables you decide on when to use a third-party such as an an accountant and gives you confidence that you’ve covered everything that’s legally expected of your new business
OTHER RESOURCES?
>> A guide on company setup from Bytestart
>> An article on ongoing responsibilities for limited companies from Startups.
>> Choosing a name from Bytestart
>> Free resources for starting your business from Start Your Own Business
Setting up a social enterprise
Follow these steps to form a CIC or Social Enterprise
from GOV.UK
WHAT? A list of requirements and process for structuring a company as a CIC, plus information on other relevant charitable legal forms
WHEN? You want to set up a social enterprise or a trading charity
WHY? CICs require a number of specific legal documents to be put in place at the outset
OTHER RESOURCES?
>> A comprehensive and accessible guide on CIC registration from Charity Excellence Framework
>> Q&A on setting up a CIC from The Guardian
Registration of businesses that aren't limited companies
Guidance for setting up as a Sole Trader (self-employed) or partnership
from HMRC
WHAT? Government advice and explanations on alternative business forms
WHEN? You're starting a business and don't want to set up a limited company
WHY? Explains how to account for business income and expenses through self-assessment
OTHER RESOURCES?
>> Guidance on setting up a partnership from HMRC
