So you have the great idea, you have done some research and now you want to get started. One of the questions that comes up is whether you need register your own company. Well that will depend on your business plan and forecasts and how much legal and financial responsibility you want to take for the business.
Setting up as a sole trader or partnership and registering with HM Revenue and Customs (HMRC) is the easiest option if you are starting a small business. You will need to follow certain rules on running and naming your business. By setting up as a sole trader, you maintain complete control over the business, keeping all the profits after tax. The law will not distinguish between yourself and your business, meaning if the business runs into trouble, you will bear all the legal and financial responsibility.
A limited company is incorporated, which means it has its own legal identity and can sue or own assets in their own right. Limited companies have to submit an annual return and annual accounts to Companies House each year. Setting up as a limited company could be more tax-efficient: the profits belong to the company, rather than you; you are paid as an employee by the company, as a shareholder if you take that option you can receive dividends as well.
For both options there will be business expenses that are deductible before arriving at your taxable profits.
If you want to discuss your own situation then please request a FREE initial consultation.