becoming a sole trader

so i begun research into what legal structure our business should have and how we manage it.

http://www.businesslink.gov.uk on this website information is provided to help starter businesses with the setup process. a list and description is given for the different types of legal structures for companies.

they include:

Sole traders

Partnerships - ordinary partnerships, limited partnerships, LLP

private companies - private limited, private unlimited

public limited companies - PLC

specific types of limited companies - CIC, RTM, SE

European economic interest groupings - EEIG

uk establishments of overseas companies

Franchises

which one suits us?

i would personally say that for now the sole trader legal structure would suit us as we are a start up company with very little knowledge in business, by choosing this option we are not tied in to any long term agreements and do not have to pay any fees.

although we do have to manage all of our own income as self employed individuals and the companies profits have to be carefully managed.

here is the breakdown for a sole trader:

Sole trader

Being a sole trader is the simplest way to run a business - it does not involve paying any registration fees, keeping records and accounts is straightforward, and you get to keep all the profits. However, you are personally liable for any debts that your business runs up, which make this a risky option for businesses that need a lot of investment.

Set-up

You need to register as self-employed with HM Revenue & Customs (HMRC).

Management and raising finance

You make all the decisions on how to manage your business.

You raise money for the business out of your own assets and/or with loans from banks or other lenders.

Records and accounts

You must:

• make an annual Self Assessment tax return to HMRC
• keep records showing your business income and expenses

Profits

Any profits go to you.

Tax and National Insurance

As you are self-employed:

• your profits are taxed as income
• you pay fixed-rate Class 2 National Insurance contributions (NICs) regardless of any profits you make
• you pay Class 4 NICs on any profits

Liability

As a sole trader, you are personally responsible for any debts run up by your business. This means your home or other assets may be at risk if your business runs into trouble.

(http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073789606&r.i=1087521916&r.l1=1073858805&r.l2=1085161962&r.l3=1073865730&r.s=sc&r.t=RESOURCES&type=RESOURCES)