Legal Structures...

Legal structures are something all businesses need to comply to in order to run a successful business. There are many types of legal structures but the main ones are:

• Sole Trader- This is when a company is run by one person, being self employed and run your business independently.
• Limited Company- This is when an organisation set up can run itself, it means a business or person running a business is responsible within its own rights for everything that happens within the business. The finances are separate to your personal finance, any profits made are owned by the company or business but only after the incorporation tax is payed.
• Ordinary business partnership- This is when you and a business partner personally share responsibility for the business. All profits made within the business can be shared between the partners, each partner pays tax on their share of the profits within the business.
• Limited partnership and limited liability partnership- This is when liability for the business debt differs depending on whether the business is a limited partnership or limited liability partnership. You can share all the business profits between the partners. Each partner pays tax on their share of the profits.

All these legal structures involve having to:

• Send off self assessment tax return forms every year
• Pay income tax and the profits made on this business
• Pay out national insurance
• You have to register for VAT if the business takes more than £82,000 a year.

My business will be run with a sole trader legal structure as I will be running my business alone.