After looking at the advantages and disadvantages of being a sole trader I can say that I will consider it as a possibility for my business.
Partnership
Another possibility for starting my business is to run it as a partnership, which means having any number from two to twenty people running the business, just as a sole trader it has its advantages and disadvantages. As there are a number of owners usually they can all bring something different to the business usually within their field of expertise, as with a sole trader a partnership is easy and cheap to set up however it is easier to obtain capital in a partnership as there are more participants, who could help fund it. However disadvantages of a partnership are that as there is more than just you, disagreements could break out, there is also less profit as it has to be shared across all partners, and unlimited liability is still a major disadvantage as if the business gets into trouble and owes money then all partners are accountable for it.
After considering a partnership for my business I will leave it open as an option as I did with a sole trader. As I feel that many of the advantages could greatly help the business I plan to run.
Private Limited Companies
Finally there is another possibility in the form of a Private Limited Company, as with the first two types of business I described it has both advantages and disadvantages. The main difference is that private limited companies have their own legal identity and therefore limited liability for any owner/shareholder, which means that should the business fall into debt or similar they can not be held accountable for it, as the business has an identity of its own. When someone sues’s the company they do just that and sue the company, not the owners. As a limited company it is also usually easier to borrow money from banks, due to the re assurance they bring. However there are a number of disadvantages to go with the above, which are. Firstly due to there being shareholders, dividends will have to be paid meaning there is less profit, secondly as a limited company your financial records can no longer be kept private, they must be made available at the end of every financial year, lastly another disadvantage of a limited company is availability of shares, because as a limited company they cannot offer their shares for sale to the general public as with a Public limited company (see below)
Despite the large amount of advantages in a limited company I will not consider this for my business as I do not feel it is the best way to start, it may however be necessary to develop into a limited company once trading has started and become steady and the business is making a solid profit.
Public Limited Companies
There is another type of business in the form of a public limited company; however nearly all public limited companies are much larger companies. I have already discounted this type of business as an option as for a company to become a public limited company it must have an issued share capital in excess of £50,000. Which my currently non-existent company does obviously not have. It is for this reason I have discounted a PLC as an option.
Decision
After assessing the advantages and disadvantages of all possible company types, I have decided that the type of business that would most suit my plans would be a partnership, as it would be cheap to set up and quite easy to run. Capital would be easier to obtain than as a sole trader, and each member of the partnership could bring a different section of expertise to the business. It also means that the work would be shared and things such as holidays could be taken as there is more than just one person. It would however be a difficult choice to select and find the right partner and should this not be available then I believe a sole trader would be the next best option, however I do feel that there would be plenty of possibilities to start a partnership and therefore this is what I will plan for.
