Getting Started
Choosing the Right Business Structure
Compare limited companies, sole traders, and partnerships to find the best structure for your business.
By Free Business Registration Ltd · 1 min read
Selecting the right business structure is crucial for tax efficiency, legal protection, and business growth. This guide compares the main UK business structures.
In this guide
Limited Company
- Separate legal entity from its owners
- Limited liability protection for shareholders
- Corporation Tax: 19% small profits rate up to £50,000; 25% main rate above £250,000, with marginal relief between the thresholds where eligible. Thresholds may be reduced for associated companies or short accounting periods.
- More credibility with customers and suppliers
- Can be more tax efficient for higher earners
- More administrative requirements and costs
Sole Trader
- Simplest business structure to set up
- You and your business are legally the same entity
- Unlimited personal liability for business debts
- Pay income tax on all business profits
- Less paperwork and administrative burden
- Keep all profits after tax
Partnership
- Two or more people share ownership
- Partners share profits and liabilities
- Each partner pays tax on their share of profits
- Requires partnership agreement
- More complex than sole trader, simpler than limited company
Official guidance
This is general guidance. Check the current official rules and get advice for your circumstances before making tax, legal or financial decisions.