What form should my new business take?

Did you start a new business in 2022?

Between March 2021 and March 2022, 753,168 new businesses started in the UK, which was slightly less than the year before. One of the first questions to answer when you start a new business is what form your business will take.

Here are the options you have when considering what form should your new business take.

Sole proprietorship – the business is owned and run by one person and there’s no legal distinction between the person and the business. There are 3.1 million sole proprietors in the UK, which is 56% of all businesses. Of these, the vast majority do not have any employees making our ‘sole traders’ the most common form of business ownership in the UK.

Partnerships – The business is owned and run by two or more people and strictly speaking, no legal agreement is necessary but we would recommend having one before you start trading. The partners share the risks and the responsibilities. There are 353,000 partnerships like this in the UK and most do not have employees. (257,000)

Company – A business owned by its members. This is ‘limited liability’ which separates the business finances from the personal finances of the owners and creditors may only pursue the company for any debts. There are 2.1 million companies in the UK, which is 37% of companies. 1.1 million of these have employees while 932,000 do not.
Across all the forms, SME Finance Monitor reports that 84% of all SMEs are either sole proprietors or companies with just one owner.

Running a business requires a huge range of skills, knowledge and decision making. We have a great deal of experience helping owners set up and run their businesses. We can provide a sympathetic ear and impartial advice to help our clients with all those business decisions.

To find out how we can help you, please start by finding your nearest accountant here.