| Structure | Owner liability | Tax | Public accounts? |
|---|---|---|---|
| Sole trader | Unlimited personal | Income tax on profits | No |
| Partnership | Unlimited, joint and several | Income tax on each partner's share | No |
| LLP | Limited to capital contributed | Income tax on each partner's share | Yes, Companies House |
| Limited company | Limited to shareholding | Corporation tax on company profits | Yes, Companies House |
Choosing a structure is a trade-off between simplicity and protection. A sole trader has almost no paperwork but is personally liable for every debt of the business, creditors can take the owner's home. A limited company protects the shareholder personally, but must file accounts and a confirmation statement every year with Companies House and pay corporation tax through HMRC.
The tax and reporting differences matter for finance staff, because they change what information the business must produce, and when.
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