Starting a business in the United Kingdom can be a prohibitively complex endeavour, especially if you’re an expat. Bureaucracy will inevitably stalk you at every turn, involving issues such as tax payment, documentation, administration, company structure and importantly a visa you will need to work in the UK.
As you know, there are different types of businesses and you have to choose carefully the type that fits your company structure. You will need expert advice on the legalities of the business, but as a starting point of reference, here are 8 different types of business structures for startups in the UK.
FREELANCING
Freelancing is also called sole trading in the UK. If you want to work as a sole trader in the United Kingdom, you first have to register yourself as self-employed. When you work as a freelancer, you get to keep all your business profits after tax has been deducted, but you must make sure that you pay your income tax and National insurance on time. You are also liable for any losses that your business may incur.
After registering and starting your business, you need to make arrangements for taking payments from clients, this can be done by using invoice templates. Due to the nature of freelance work, invoice payments can often be delayed or forgotten for a significantly longer time than when a more ‘professional’ looking business is involved. As such, it’s a good idea to use invoices that look legitimate in order to push clients to pay more speedily.
There are so many apps and invoicing softwares available online, but for a tool with a simple, approachable format, download this invoice template; it’s free and easy to use.
GENERAL PARTNERSHIP
This is another type of business that includes two or more people or companies collaborating together as partners. With responsibilities, the business profit is shared equally. Both the partners have to pay tax on their shares and are responsible for their losses and their debts too. This kind of business is ideal for people who are involved in several small businesses.
LIMITED PARTNERSHIP
This type of business is similar a general partnership business as discussed earlier but the difference is that one partner is fully involved in running the business and is responsible for handling debts. The other partner is a limited partner that means they handle all the financial affairs or have invested financially in the business.
LIMITED LIABILITY PARTNERSHIP (LLP)
This type of business involves a written agreement between the partners and should be registered with the UK’s registrar of companies, also called Companies House. This is the most common type of business structure for startups.
PRIVATE LIMITED COMPANY (LTD)
Private limited companies are considered as a separate entity. These companies are also registered at Companies House and need at least one director and a shareholder. The company has its shares which are restricted to be traded outside the company or publicly.
PUBLIC LIMITED COMPANY (PLC)
This type of business is different from limited companies, in PLC the shares can be traded publicly. These shares can be listed on a stock exchange.
UNLIMITED COMPANY
In the UK, this type of business is not so common. The shareholders are liable to pay debts, that means these debts can be covered with personal assets if the business is unable to pay its debts.
SOCIAL ENTERPRISE
This type of business in the UK invests its profits in charity and social welfare, then distributing it among the shareholders. Social enterprise has a business structure similar to that of limited companies.
Whatever business you are interested in starting, make sure that you maintain your business with automated invoicing and support guides. This will navigate you through running your business expertly.
*Anything written by IDEAL Magazine is not intended to constitute financial advice. Always consult with an independent financial advisor or expert before making an investment or any personal finance decisions.*