Business Structures

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In Brief

Starting a business or investing in the business of others can be a significant step for many people. There are several different types of business entities available for an entrepreneur from the simplistic, sole trader to the highly sophisticated partnership agreements used for multinational joint ventures.  

When selecting a business type for the client, lawyers and accountants alike, need to balance the advantages and disadvantages of each one. Clients should do a cost/benefit analysis taking into account risks, duties and obligations arising from the different types of entities, identify assets available for creditors and evaluate options for protecting personal assets if the business runs into financial difficulties.  

Another critical element to consider is the taxation of the business entity. Individual tax rates tend to be quite high (45% for income over £150,000), whereas corporate tax rates are low in comparison (a flat rate of 19%). Inevitably, this will be another factor, influencing the choice of business structure.

Finally, the ability to keep business affairs private and out of the public domain is an important consideration for the client. The protection of details concerning business turnover, losses or investments may be a high priority for some clients, whilst allowing the exit of business partners without putting the remaining partners at risk, is of utmost importance for others. 

What’s in this module?

Sole Traders>> learn how to set up as, the requirements and risks of trading as a sole trader

Partnerships >> examine how traditional partnerships operate, the duties and obligations of partners

Limited Liability Partnerships (LLP) >> study the characteristics of this new hybrid form of partnership and the advantages for partners

Joint Ventures >> delve into joint ventures and understand the role of professionals in helping clients successfully set up a joint venture.

  • Exercises
  • Case Study
    • A Precedent -making case in common law
      • details and judgement
      • why the case is important
  • Writing Corner
    • Presentation of a legal advice column
    • Advice from a legal journalist responding to a question from a reader