Just like everything in life, businesses change as they get older. Their needs change, as do those of the business’ owners.
Not only that, but rules and regulations governing the business, its trade and its tax will change during the business’ lifetime. All of these factors could mean that what was once the best business structure for you is no longer the right option. Even if you took advice when you started your business, it is worth periodically checking that the business is using the most appropriate vehicle for its operations.
Sole trader, partnership, limited partnership, limited liability partnership or limited company: they all have different legal, accounting and tax implications. Tax is often the key driver in deciding on what form you want your business to take but the legal implications are also worth considering.
From a legal point of view, a limited entity might well give you the most personal protection as they can bring limited liability status to the business owners. If you are operating as a sole trader or partnership, as a business owner, you are financially exposed to an unlimited extent. But limited entities bring their own issues. Limited liability companies and partnerships both require accounts, ownership details and other information to be filed at Companies House. Not only does this bring the burden of more paperwork, it also means that much of your business information will be in the public domain.
It is advisable to speak to your accounting and legal advisors and make sure your business entity is the right kind for you. It is possible to change your business structure to match what is most appropriate for you and your business and therefore give you comfort that your business is operating through the vehicle that is right and best for you.