What legal structure to you choose to trade through? These slides will give you some insight and guidance when making this cruicial business decision . . .

1. Legal Structures
Structures explained, Tax, Hints & Tips

2. Introduction

Suggested Possible Legal Structures for New Business Ventures
− Sole Tradership
− Partnership
− Limited Company
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Company limited by shares

Company limited by guarantee

Limited liability partnerships
− Social Enterprises
− Charities
− Co-operatives

3. Simple Business Structures
 Sole Tradership

YOU are the Business!

In law, you and the business are the same entity

You own all the assets, you owe all the liabilities

The most simple structure to start with

For that reason - recommended initially!

4. Sole Trader Taxation

Tell the Tax Office (HMRC) that you are trading
– Start with www.hmrc.gov.uk and follow the links

Record Business Transactions
– Cloud based accounting solutions
•
Over 60 suppliers, some of which are free!
– Desktop solutions are also available

Keep proper records!
– Business expenses - 'wholly & exclusively’
– There must be no dual purpose for the expenses
– Keep for 6 years – digital evidence is allowable

5. Simple Business Structures
Partnerships
•Underpinning legislation is over 100 years old
•Owners ARE the business. Legally the same
•Liability is unlimited & is joint and several
•Partnership Agreement is not a legal requirement
•Forming a Partnership Agreement does have advantages
•Very simple structure when collaborating
•A Corporate version of the Partnership structure is known as
the Limited Liability Partnership

6. Partnership Taxation
 Register with HMRC
• Register first for self-assessment
• Register the Partnership
A tax return is required for the Partnership and also for each
partner individually
(i.e. for a partnership there are a minimum of three tax returns)
• Record all business transactions
• Keep proper records
(In a similar way to the Sole Trader)

7. Complex Business Structures
 Limited Company
 Lots to think about such as:
 Company Formation
 Company Law (Companies Act 2006)
 Company Management (Being a Director)
 Share Capital & how to structure the company
 Company Debt
 Selling a Limited Company
 Restructuring & winding up a company
 Corporation Tax

8. Complex Business Structures
 Limited Company Continued . . .
 It is a separate legal person distinct from it’s shareholders
 Shareholders are hidden behind the veil of incorporation
 Liability of the owners is limited to the capital introduced
 The Company can continue forever, with new directors
 Contracts and agreements are made in the company name

9. Limited Company Compliance
 Taxation (HMRC)
 For Small Companies, Corporation Tax is due on profits.
 20% on profits up to £300,000.
 Profits are calculated by preparing company accounts
 Corporation Tax is payable 9 months & 1 day after the company
Year End.
 Corporation Tax Return Is due 12 months after the year end.
 Companies House
 Accounts
 Annual Return
 Other forms as and when required

10. Limited Company Tips
 Limited Company Continued . . .
 Think about:
 Type of Company
 Ltd by shares, Ltd by guarantee, LLP, PLC?
 How will you structure the company?
 Shareholders, voting rights, Debt
 How will you manage the company?
 Companies House & HMRC seminars for Directors
 Professional Training Courses
 How do you form the company?
 DIY or go to a Company Formation Agent?
And that’s just the start of it!

11. Limited Company Tips
 Limited Company
 Consider getting professional advice and support
 Accountant, Tax Advisor, Solicitor
 Always do you research!
 Learn about the legal environment around a company
(Companies Act 2006) to start with
 Speak to your business advisors
 Be prepared for additional costs
 Incorporate a company for the right reasons and each
business will have to weigh up the pro’s and con’s.

12. Other Legal Structures
 Social Enterprises
 Trades for a social or environmental purpose. ‘Social Mission’
 62,000 businesses, £24bn, Employing 800,000 people
 Legal structures include (in addition to the standard Ltd)
 Community Interest Company (CIC)
 Industrial & Provident Society (IPS)
 Charities
 ‘Any body of persons or trust established for charitable
purposes only’ (Taxes Act 1988 s506 (1)
 Registered Charities are Regulated by Charities Commission
 Legal Structures include Limited Companies, Trusts, any of
the above mentioned.
 Co-operatives
 A separate legal entity controlled by it’s members.

13.  The material in these slides is presented for information
only. You should seek specialist advice if required. Koshy &
Co and it's staff take no liability or responsibility for the
actions taken by those who have listened to this
presentation, or read these slides and acted upon them.
Health Warnings!

14. Thank you . . .
Koshy & Co
Suite 6, Albion House
470 Church Lane
London
NW9 8UA
Telephone : 0330 222 0017
ray@koshyandco.co.uk
www.koshyandco.co.uk