Business structures

One of the most important choices you will make when you go into business is deciding on the best business structure for you. If you haven’t been involved in business before, it may be difficult to know which option to choose, so it makes sense to talk to the expert team at ML Enterprise.

There are four business structures, each with advantages and disadvantages in terms of factors including control and tax implications, and a different structure may suit your business at different stages in its life

You can see some key points of each structure by clicking on the links below but please contact us for more detailed information.

Sole trader

Your business income will be counted alongside any personal income and you will pay income tax on the total. As well as Class 2 National Insurance contributions (NICs), you pay Class 4 NICs on profits,
Becoming a sole trader gives you independence and the flexibility to quickly react and adapt to changes in your business and customer demand. You’ll also have complete control over decision-making and your finances.

However, you will be personally liable for any business debts if things go wrong.


A partnership is a straightforward way for two or more self-employed people to go into business together, without having to set up a company. Although you are only likely to go into business with someone you work well with and trust, it is still advisable to have a partnership agreement in place, covering all the key issues, in case of serious disagreements.

The partners and the partnership must each submit an annual self assessment tax return. They will pay income tax on the profits of the business, along with any other personal income, and NICs on their personal income and any business profits.

Each partner is personally liable for the debts of the partnership, even if these were caused by another partner.

Limited liability partnership (LLP)

An LLP has its own legal identity and it is the LLP – not its members – that is responsible for any debts, unless members have guaranteed a loan to the business.

As well as the benefits of limited liability, members of the LLP enjoy the flexibility of organising their internal structure as a traditional partnership. Members of the LLP share any profits, which are regarded as their personal income, and pay income tax and Class 4 National Insurance on these.

LLPs are similar to companies in that they must provide more extensive financial information than for partnerships, including the filing of annual accounts and an annual return to Companies House each year.

Limited company

A limited company is a business structure that exists as an independent legal body, separate from the people who own it. Directors and shareholders are not personally responsible for the company’s debts, except in exceptional circumstances.

Limited companies can take a number of different forms, including a private limited company and a public limited company (plc).

They must register with, and submit annual accounts to, Companies House, along with an annual return to Companies House, updating certain company details. Limited companies pay corporation tax, while their employees pay income tax and National Insurance contributions on wages and salaries drawn.

To find out how we can help you, please contact us.