If you are thinking about launching a business in the United Kingdom, you should know that it’s crucial to learn more about the business structures UK options you have. These structures have a direct impact on the performance of your business and choosing an inappropriate business structure can limit or even ruin your business venture. Remember that every business structures come with certain pros and cons and that’s why you need to conduct thorough research.

The Types of Business Structures UK

According to the experts and the law, there are four basic types of business structures in the UK:


Partnerships include at least two individuals that are launching a business together. Their main objective is making a profit. In this type of structure, all expenses, profits, responsibilities, and risks are shared equally. The members of the partnership must be self-employed. Even though the law doesn’t require a legal contract, it’s always a good idea to come up with a partnership agreement. This is a great way to avoid any misunderstandings about the specific roles of the members. Keep in mind that there are three basic kinds of partnerships – limited liability partnership, limited partnership, and standard partnership.

Sole trader

This is by far the least complex business structure. Sole traders are actually self-employed business owners that make all the decisions on their own and collect all profits. Forming a sole trader business venture is very easy and the process doesn’t involve much paperwork. A simple registration with HMRC as self-employed individuals and a completion of a self-assessment tax form annually will do the job. A sole trader is a type of business structure that doesn’t require accounting and business audits. Let’s not forget that in case your business starts expanding and growing you will probably notice that this kind of business structure comes with many limitations. A sole trader also has an unlimited responsibility for debts.

Limited company

Unlike partnerships and sole traders, limited companies have a specific status – they are separate legal entities. So, the members/founders of these companies have limited liability. In other words, the personal assets of each owner are separated from the business assets. But, in order to create a company like this, you will have to follow a strict procedure which involves a lot of paperwork. You have to register with Companies House and in addition, you must create an Articles of Association and a Memorandum.

Community Interest Company

Finally, there are community interest companies which are much newer compared to the rest of these structures. These business structures are similar to limited companies, but they are focused on social and/or environmental activities. In most cases, the profits they have, are reinvested in the company. Registering a CIC company is different because it must be registered with the special body known as CIC Regulator. The owners must provide evidence that the company will bring benefits to the community.

Consult a company formation agency in order to find out more about business structures.



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