Depending on which legal form you select it could have repercussions for various aspects of your business, such as the level of tax you have to pay and limiting the potential for investment.
When setting up a new business, it is important for you to determine the legal form that is most appropriate.
There are a few aspects that are important when choosing a legal form. Probably the most important of these is related to your level of personal liability if anything goes wrong. A corporation is viewed as a completely separate legal entity and you will not be liable if the business fails, whereas sole traders are not seen as separate entities and the company debts will be taken from the personal fortune of the owner.
However, the reduced risk associated with corporations also has drawbacks. Unfortunately you will end up paying tax twice on the income that you are earning, firstly on the profit that the business makes and then again on the personal income that you receive from the business.
Setting up as a sole trader or partnership is also a lot simpler than setting up a limited company. A limited company requires a far more formal approach to business and generates a lot of red tape for the owner to deal with, including filing your accounts annually with Companies House.
The choice of legal form is sometimes restricted by the industry that you wish to trade in. If you are in doubt, talk to your accountant or seek legal advice.
Regardless of your choice of business, WinWeb have software and service solutions to suit every user. To find out how WinWeb’s software & services could benefit your business, speak to one of our Specialists today.