All about business: What are the different types of business structures in the UK?
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If you’re thinking of starting a business in the UK, it’s important to understand the different types of business structures that are available to you. Each type of business has its own benefits and drawbacks, so it’s important to choose the right one for your needs. According to Venture Smarter, a popular online site known for comprehensive business guides, the way in which your business grows, pays tax, and deals with liabilities will depend on its legal structure. In the UK, the most common types of business, structures are Limited Liability Partnership, Limited Company, Sole Trader, and Partnership.
Limited liability partnership
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Depending on the size and scope of your business, you may want to consider a limited liability partnership. This type of business structure can offer some protection for your personal assets in the event that your business is sued. A limited liability partnership is a business structure in which the partners have limited liability for the debts and obligations of the business. If the business goes into debt, the partners are not personally responsible for repaying the debt.
To dissolve a limited liability partnership, it should have at least one member. A limited liability partnership is expected to be dissolved when the company has turned insolvent. Similar to dissolving an LLC, the dissolution can happen when all the partners decide to dissolve the business, when a partner decided to withdraw from the partnership or when a partner dies. The dissolution process may differ depending on whether the limited liability partnership is a limited liability partnership at will or a limited liability partnership by agreement.
Limited company
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A limited company is a separate legal entity from its owners and has limited liability for its debts and obligations. If the company goes into debt, the owners are not personally responsible for repaying the debt. A limited company can be either private or public. A small number of shareholders own a private limited company, and a large number of shareholders own a public limited company. A limited liability company may be formed with one member or multiple members, as long as there are at least one member and the rights of other members are represented by another person or persons. In order to form a limited liability company with more than one member, it is required to be registered for tax purposes. The directors of a limited company are persons who are responsible for managing the company. The objects of a limited company may include, but are not limited to, the carrying on of any or all businesses or professions; and/or forming an unlimited number of subsidiary companies as members of such unlimited number.
In the UK, A limited company is a company that has been incorporated under the Companies Act 2006. You will have to form a company in order to create a limited liability company. You should avoid incorporating the company yourself, as you might be making some mistakes. You can hire a solicitor or legal advisor to help you with the process of incorporation. Dissolving a limited liability company is called “winding up”. In dissolving an LLC in the United Kingdom, the Act requires giving members the right to remove its directors at a meeting and then sell their assets to repay creditors.
A limited liability company is dissolved when all the members of the company decide to dissolve it. All of the partners may withdraw from an LLC at any time and remove themselves from being a member by filing documents that include their intent to withdraw as partners. An LLC that has been formed with a membership agreement and is not a general partnership or limited partnership can be dissolved only by agreement.
Sole trader
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The UK’s most common type of business structure is the sole trader. This is where one person owns and runs the business. The benefits of this include simplicity and flexibility, as well as the fact that you are usually taxed at a lower rate than other types of businesses. The downside is that you are also personally liable for any debts or losses incurred by the company. The company has a separate legal personality from its owners and is subject to its own laws and liabilities.
Partnership
When you start a business with one or more other people, you have a partnership. Each partner owns a part of the business and is known as a ‘member’. A partnership is a business structure in which two or more people share ownership of the business. Partnerships have unlimited liability, which means that all partners share the responsibilities, risks, and rewards of running the business