Many people setting up a business are rather hazy about what business structures they can choose. Some think all businesses are companies when they are not. Some think that a company has to be a large national brand. It is more complicated than that.
It is essential for a business owner to decide which business structure they want to use and then take the necessary steps to set that structure up for their business. Different rules and regulations apply to different business structures. HMRC tax different types of business structure differently and you need to tell them which one you are using. So there is no escape and this is a decision to have to make.
There are three main types of business structure:
Where one person sets up in business . There is no formal procedure to set up
Two or more people set up in business together. There is no formal procedure to set the business up but a Partnership Agreement is needed to regulate relations between the partners to avoid inevitable problems down the line
Structure has to be set up and registered at Companies House. The regulations of Companies House have to be observed in addition to the requirements of HMRC. More regulated than the other types but also has its advantages
There are different variations of these three types so make sure you find the right one for you and your business.