Do you want to get your business up and running quickly? Do you need investors to get off the ground? Is your business a passion project or an organisation you want to grow?
Sole Traders go into business on their own without registering as a Company. While start up costs are low and you get all the profits, you are also liable for all debts, which might put your personal assets at risk.
Partnerships are where two or more people form a business together. You’ll need a Partnership Agreement to clearly set out how the capital, profits, debts and work will be shared. In a partnership you can share the costs and workload of starting a business, but you may be liable for your partner’s debts too.
Registering a Company creates a separate legal identity from the people who own it. Owning a registered business gives you more credibility in the marketplace, is easier to grow, and comes with some tax breaks. It can be more complicated to set up a Company with directors and shareholders, and there are more regulations than for sole-tradership and partnerships.
All businesses need to set out the rules for how they will be run. For example with a Company, a Constitution outlines the rights, powers and duties of the board, directors and shareholders, and can be tailored to your Company.
Without one, your Company will be governed solely by the rules found in the Companies Act 1993, which may not take into account the specific nature of your business or meet your expectations.