LATEST TWEETS

Is your organisation protected from employee social media legal risk? https://t.co/oUOH7G7SSi
Taking your first commercial lease? Read our handy advice here https://t.co/Sr7zkWYtil
Good news - our phone line is now working again, so you can reach us on 01566 772375 - we look forward to speaking to you!
RT @rights_net: TRUE OR FALSE? As an employer, you could be held liable for an employee's damaging social media post

What legal considerations do I need to think about when setting up a business? (Part 1)

If you are considering setting up a business there are numerous decisions that you will have to make, including whether you will operate as a sole trader, in partnership with someone else or through a company.  With the last two options, you will also need to think about the structure of your business.

To make an informed decision about the type of business vehicle that would work best for you, you need to be aware of the legal responsibilities and obligations that each will impose on you.

In the first of two articles on this subject Louis Mathers corporate and commercial lawyer with Parnalls Solicitors in Launceston explains what you need to think about if considering setting up as a sole trader or in partnership.

Sole trader

The easiest and quickest way to get started is to work as a sole trader.  With this option, you will be able to start operating with little formality and with the freedom to make all decisions yourself.   Any profits you make will be treated as personal income, so at the end of each tax year you will simply need to complete a self-assessment form as a self-employed person.

The drawback to being a sole trader is that you assume personal liability for all business debts, so you expose yourself to significant personal risk.  Depending on the size of your debts and your ability to pay them, you could face the prospect of having a county court judgment made against you and the possible loss of your home or bankruptcy if you cannot pay what you are ordered to.

Partnerships

If you choose to trade with one or more people as a partnership, you will need to formalise your arrangements and will almost certainly want to make most decisions (especially significant ones) jointly.  All partners within the business will share liability for the business debts, although someone you owe money to could choose to go after one of you for everything rather than trying to pursue you all.  This is because liabilities in a partnership are joint and several.

As well as each partner submitting their own self-assessment return for tax purposes, you will also need to submit a joint partnership tax return to HMRC.

If you are thinking about creating a partnership, it is vital that you take legal advice and ensure you have a well-drafted partnership agreement to cover the arrangement.

Limited liability partnership

A limited liability partnership offers the structure and flexibility of a partnership, but with more protection against potential liability.  With this option, you will still need an agreement to govern your relationship with the other partners, and you will also need to submit business as well as personal accounts to HMRC.  However, your personal liability for business debts will usually be limited to the total sum that you invested initially.

Other considerations

There are other factors that may influence your decision, such as the need for more finance to get the business off the ground than you can afford, or a desire to offer a broader range of services than you are personally qualified to undertake and where there is not enough money available to employ someone.  A solicitor can help you determine what your requirements are and how they can be met, and then advise you on which option they think would be right for you.

If you are thinking about setting up a business, please call Louis Mathers on 01566 772375 or email mathersl@www.parnalls.com

The contents of this article are for the purposes of general awareness only.  They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

MORE NEWS

Trustees’ duty to give information to beneficiaries

Five problems with a leasehold property

Taking your first commercial lease

Is your organisation protected from employee social media legal risk?

Have you been targeted by negative social media posts?

Farmers be alert when being inspected

Help for House Sellers?

Don’t let your digital assets end up in a digital grave

Valuing an estate for probate

Development proposals and your local authority search

What can you do if your child is injured in a serious accident

NetRights welcomes new protection for social media users

SHOULD I GET A LAWYER FOR A SPEEDING OFFENCE?

Supreme Court recognises that social media is a “casual medium” in libel battle

Choosing the best conveyancer who is right for you

Making a will after a second or subsequent marriage

Option or promotion agreement – which is best for landowners?

Anonymous pub and restaurant online reviews leave a bad taste

Have you had an accident involving a horse?

Help to Buy – beware of some cracks in the structure

Understanding Lasting Powers of Attorney

Changes to Energy Performance Certificate for Landlords

Had a cycling accident? Your route to obtaining compensation

New year, new home: tips to sell your home in the New Year 

Tax Planning for your inheritance

Hearing loss: when your employer may be liable

Buying a home for your retirement, five things you need to consider

Farmers plan to diversify after Brexit

Ministers press ahead with probate fee shake-up - reports BBC News

Botched dental treatment? You may be entitled to compensation

Why a Health and Welfare Power of Attorney is a good idea

Will the new charge on building developments in Cornwall affect you?

Energy Performance Certificates – Do They Matter?

HMRC Challenging Stamp Duty Land Tax Payments

Ben Mitchell qualifies as a solicitor

The potential implications of Brexit on employment law

Appointing a guardian for your children

Houses in multiple occupation – new rules from October 2018

New Agriculture Bill published

Will Brexit affect my pension?

Dreaming of a holiday home? Sort out the legals before putting your feet up

Lasting Power of Attorney by Deborah Adams

Settled status after Brexit by Alexis Hager

How to choose an executor to administer your estate when you die

How overage agreements can boost profits from your land

Top tips for first-time buyers

How Could Brexit Affect My Farm?

Wills & Succession in Spain by Deborah Adams

Brexit ­– an international and local view by Alexis Hager, Litigation

Capital gains tax - important facts for non-residents of the UK

Buying a home: the importance of making sure the seller is entitled to sell

Changing a will after someone has died: it is possible and it could save you money

Your responsibilities when you have people working in your home

Sad passing of Battle of Britain pilot who served with Parnall family member

Considerations when buying a heritage property

Disciplinary proceedings at work: guide for employers

Employers should have a disciplinary process in place, but just following this may not be enough to avoid falling foul of the law and exposing yourself to the risk of an employment tribunal claim.

Selling your land through a conditional contract

Why you should always use a solicitor to prepare your will

Putting your legal affairs in order

How to extend a lease on a flat or buy a share of the freehold

Delayed Health Checks

New Marketing Team at Parnalls Solicitors Ltd

Social media: snooping in the recruitment process

A landlord's guide to tenant alterations

Equity release, your questions answered

Short term lettings: avoiding the pitfalls

How to apply for a grant of probate

Are you entitled to a fee refund for your Lasting Power of Attorney?

What to do when someone dies

Business disputes: can they ever be avoided?

Accident at work: what to do and when if you have been injured

Director appointment

What type of will do I need?

Business rates: a financial ticking time bomb (Part 2)

Conveyancing quotes: what you need to know

New appointment in Litigation

Property boundaries and rights of access: what are they and why do they matter?

Mental Health - we can get you the help you need

Business rates: a financial ticking time bomb (Part 1)

Leaving a gift to charity in your will

Parnalls helps two leading Devon organic meat companies to become one

Katherine Flashman Kitson is appointed Governor of St Joseph's School, Launceston

Financing your home purchase (Part 2)

New rules on debt recovery may delay payment of consumer debts

Making financial gifts during your lifetime (Part 2)

Our Guide to Lasting Powers of Attorney for Your Business Interests

Financing your home purchase (Part 1)

Careless replies to pre-contract commercial property enquiries could land you in trouble

Making financial gifts during your lifetime (Part 1)

Property referrals and recommendations - what to consider

World Alzheimer’s Day: Three-step plan to get your legal affairs in order

Legal considerations when setting up a business (Part 2)

How to avoid falling victim to property fraud

What are the key terms that need to be covered in a commercial lease? Part 3

Top 10 reasons to use a solicitor to make your lasting power of attorney

What legal considerations do I need to think about when setting up a business? (Part 1)

Why you need to update your will as soon as you decide to separate or divorce

What are the key terms that need to be covered in a commercial lease?  Part 2

The Bank of Mum and Dad: top tips when lending money to your children  

DON’T ACCEPT 50/50 ON AN ACCIDENT IN A COUNTRY LANE

The importance of insurance when life trips you up

The role of a court appointed deputy

What are the key terms that need to be covered in a commercial lease?

Ten common debt recovery mistakes

How do I know if my relative has the mental capacity to make a will?

Motorcycle accidents - what to consider when claiming compensation

Top tips for pushing your house purchase through as quickly as possible

How does the new inheritance tax perk work?

The ultimate personal injury and accident claim checklist

Jargon-busting guide to Lasting Power of Attorney

10 reasons to appoint a Personal Injury solicitor

What happens when mum or dad are ill and can’t make decisions?

How firms can take advantage of the rise of alternative finance

Should Stamp Duty be abolished?

Teenager paralysed after falling off a horse awarded £3 million in compensation

RBS to pay investors £800 million

Not happy with your accident claim lawyers?

Parnalls expands its litigation team

Hard work pays off for our Trainee Legal Executive.

Katherine Scott Flashman Kitson celebrates 20 years

How will the new Residence Nil Rate Band (RNRB) affect you?

Exciting new business hub unveiled in North Cornwall

Be careful what you post on Facebook

Parnalls rolls out the support at Wadebridge Wheels

New trainee solicitor appointed

Mark Parnall comments on Brexit in The Law Society Gazette