Trading Style

It is important that when you set up your company that you decide on the best legal status to suit your needs. There are a number of different options open to you:

Sole Trader

Advantages

• You have complete control of the business
• All profits are yours

Disadvantages

• No limitation liability, in other words, you are personally liable for any debts the business has
• It can feel lonely and isolated working on your own

Partnership

Advantages

• All parties have equal decision making and ultimate control over the business
• All parties will share the profits
• Having people to share ideas with is helpful

Disadvantages

• All partners are liable for the debts of the business
• Decision making is shared, but you loose ultimate control
• It is highly recommended that you produce contracts to determine the decision process and exit strategy for both parties

Limited Company

Advantages

• The liability you face is limited to the money that you have invested
• You are able to be flexible in the way you pay yourself which can have certain advantages
• A company may have more credibility than sole trader status

Disadvantages

• The limitation of liability may be lost if you take out unsecured loans as providers can insist on personal guarantees
• Administrative duties can increase.

Limited Liability Partnership (LLP)

Advantages

• You liability is limited to the amount you have invested
• All parties have equal decision making and control
• Having people to share ideas with is useful

Disadvantages

• The limitation of liability may be lost if you take out unsecured loans as providers can insist on personal guarantees
• Administrative duties can increase
• It is highly recommended that you produce contracts to determine a) the decision process b) exit strategy for both parties