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| Business structures |
There are 3 basic business structures that you may operate through. There are merits for each option and the ultimate decision will be on personal preference.
The three options are outlined below:
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| Sole Trader |
There is no legal distinction between your private assets and those you have set aside for the business. If the business fails and you have unpaid business creditors, they may claim against your personal assets.
There are few business regulations for a sole trader although the Inland Revenue any demand to seet accounts to substantiate any figures that are put into your tax return.
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| Partnership |
A partnership is a collection of individuals. It is customary to have a partnership agreement setting out the duties and obligations of each partner. It may also cover the internal management of the business should the rewards and management not be shared equally. This is a fall back position should conflicts arise between the partners.
As with a sole trader, there is personal liability for the partnership debts. Tax is based on the individual partners share of the profits.
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| Limited Company |
A company is a separate legal entity, separate from its owners and directors. It is bound by the Companies Act legislation and its own constitution of the Memorandum and Articles of Association.
All business liabilities are those of the company excepting where personal guarantees have been given or the legislation states that personal liability will follow from breaches of the rules.
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