Legal Structures & Registration

Legal Structures & Registration For UK Businesses:             Differences Between Sole Traders, Partnerships and Limited Companies

When starting a business in the UK, it is important to understand the legal structures available to you and how they can affect your business. From sole traders to partnerships to limited companies, there are distinct differences between them all, and each comes with its own advantages and disadvantages.

Sole Traders

Sole traders are the UK’s most common form of business, and are typically one-person businesses. As a sole trader, you will be the one in charge of managing and running the company and you will be responsible for making all the business decisions as well. Sole traders have simple administrative requirements, are easy to set up and are relatively inexpensive. However, also remember that you will be personally liable for any debts or other liabilities.


Partnerships are similar to sole traders in that minimal administrative requirements are needed, and it is relatively easy to set up. But it is also different in that two or more people are sharing the responsibility of a business. The partnership agreement is the legal document that ensures all the partners are aware of their responsibilities. Most commonly, partnerships split profits and losses equally.

Limited Companies

A limited company is a different business entity to the previously mentioned ones. A limited company is a separate legal entity and the business owners have limited liability. This means that if the business incurs any debts then the owners will not be personally liable for them. The company also has more administrative requirements that sole traders and partnerships, such as filing company accounts to Companies House and submitting an annual return. It also needs to have a board of directors.

Other Structures To Consider

Depending on the type of business, there are other structures that you can consider as well, such as limited liability partnerships and community interest companies (often referred to as CICs).

Whether you’re starting a business as a sole trader, as a partnership or as a limited company, it is important to consider the legal structure of your business to ensure you are ahead of the curve. Every business is different, so speak to a qualified professional to ensure the best legal structure for you.

At Business Growth Coaching, we specialise in helping first-time entrepreneurs choose the correct legal structure for their business. We are here to help you every step of the way and ensure that you and your business are protected. Contact us today to discuss what legal structure is right for your business.