Starting a Business? Choose the Right Structure for You

Starting a business is an exciting step, whether you are turning an idea into reality or taking your existing work in a new direction. In the early stages, there are many decisions to make, but one of the most important is how your business will be set up.

The structure you choose will affect how you run your business, how you are taxed, and what responsibilities you take on. Getting this right from the beginning can help avoid complications later on.

Why your business structure matters

When you start a business, you are not just deciding what you will do, you are also deciding how your business will exist legally.

Your chosen structure will influence:

• how you manage your finances 
• your personal responsibility for any debts 
• how decisions are made 
• how your business grows or changes over time 

While it can be tempting to choose the simplest option and move forward quickly, it is worth taking the time to understand what each structure involves.

Common business structures explained

There are several ways to set up a business, and the right option will depend on your individual circumstances.

Sole trader
This is often the simplest way to start. You run the business as an individual and have full control. However, you are also personally responsible for any debts or liabilities.

Limited company
A limited company is a separate legal entity from the people who run it. This can offer a level of protection, as the business is responsible for its own debts. It also comes with additional responsibilities, including formal reporting and record keeping.

Partnership or limited partnership
This structure is used when two or more people run a business together. It allows for shared responsibility, but it is important to clearly define roles, expectations, and financial arrangements from the outset.

Each option has its advantages and considerations. What works well for one business may not be suitable for another.

Thinking beyond the start

When choosing a structure, it is easy to focus only on the present. However, it is just as important to think about the future.

For example:

• • Will you bring in a business partner later on? 
• • Do you plan to grow and take on employees? 
• • Could you sell the business in the future? 

Planning ahead can help ensure your business structure supports your long term goals, rather than limiting them.

Putting the right foundations in place

Setting up your business is not just about registering it. There are also important legal documents and agreements to consider.

These might include:

• • shareholder agreements 
• • partnership agreements 
• • terms and conditions 
• • commercial contracts 

Having these in place early on can help prevent misunderstandings and provide clarity if challenges arise.

What if things change?

It is important to remember that your business structure is not fixed forever. As your business evolves, you may decide that a different structure is more suitable.

However, changing structure later can involve additional time, cost, and complexity. Taking advice at the outset can help you make a more informed decision from the beginning.

How Edward Harte Solicitors can help

At Edward Harte Solicitors, we work with businesses at every stage, from initial start up through to growth and change.

We can:

• talk through the most suitable structure for your business 
• assist with company formation and registration 
• prepare key documents and agreements 
• provide ongoing support as your business develops 

Our approach is practical, straightforward, and focused on helping you build a strong foundation for your business.

If you would like to speak to someone about starting or structuring your business, you can contact Brian Donnan on 01273 662750 or email bdonnan@edward-harte.co.uk.

Frequently Asked Questions

Do I need a solicitor to start a business?
Not always, but legal advice can help you make informed decisions and avoid issues later on, particularly when it comes to structure and agreements.

Is a limited company always the best option?
Not necessarily. While it offers certain advantages, it also comes with additional responsibilities. The right choice depends on your individual situation.

Can I change my business structure later?
Yes, but it can involve additional steps and costs. It is often easier to set things up correctly from the start.

What happens if I go into business with someone without an agreement?
This can lead to uncertainty if disagreements arise. A clear agreement helps set expectations and provides a framework for resolving issues.

The content on this blog is provided for general information purposes only. It does not constitute legal or professional advice and should not be relied upon as such. Specific advice should be obtained in relation to your particular circumstances. No solicitor–client relationship is created by your use of this site or contact via it. Content is provided ‘as is’ and may not reflect the most current legal developments. Please contact us if you require any further information.