Business structuring involves looking at the foundations of your business, but knowing how to set up your business at the beginning is not always straight forward. Business Structuring Lawyers can help with advice on the set-up and any changes to the structure.
Our client Chloe set up as a sole trader, but her business grew very quickly. When she came to us, she didn’t realise that she could put herself in a position where her personal assets could be better protected. We changed her business structure and set up a company for her. This gave Chloe some advantages in terms of taxation, and the costs of compliance were minimal in light of the peace of mind she had, knowing that her family home was protected. We also drafted a shareholders agreement for her which properly set out the relationship between her and other shareholders. By looking into business structuring, Chloe was able to minimise legal risks, and it also put her in a position where she was able to raise money in future.
The most common forms of business structure are sole traders, partnerships and companies and trusts. Business structuring lawyers will look at the advantages and disadvantages of each, help you choose the most suitable structure, and help with formally documenting the set-up.
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Business Structure – The easy way as a sole trader
When setting up a business as a Mum going it alone, setting up as a sole trader is the simplest and quickest way, but you need to be aware that all your business revenue is treated as personal income and your personal liability is unlimited. It can also be difficult to grow as a sole trader, so it is certainly worth looking into alternatives.
Business Structure – A lesson in setting up as a partnership
If you are going into business with a friend, you might consider a partnership as your business structure.
Our client, Sarah had started her business with her friend. However, they hadn’t set up a partnership agreement. Unfortunately when she came to us, her and her friend had different ideas about how the partnership should work, about how much time each partner would put into the business, and how much money could be drawn out of the business. The exercise of formally documenting a partnership agreement would have raised these issues in the first instance. We dissolved that partnership for Sarah, and prepared a new partnership agreement for her with her new business partner. The new business is now running smoothly.
As business structuring lawyers, we can help you by preparing a well drafted partnership agreement customised to your needs.
Business Structure – The benefits of setting up as a company
When determining your business structure you should always consider the benefits of setting up as a company. Whilst more expensive to set-up than a partnership, a company structure can be a good choice for the longer term growth of your business. A company involves directors and shareholders, and the liability of the shareholders is limited.
Our client, Danielle came to us to help her set up a proper company structure. She had personal assets including a family home and investments that she wanted to protect, and she understood the benefit of limited liability. She had also looked into various company tax benefits, and had considered the cost of compliance. We helped explain to Danielle the obligations she would have as a director, such as her general duty to exercise her powers as a director in the best interests of the company, and to ensure she is properly informed about the financial position of the company and keep proper financial records. Danielle was bringing in various shareholders, so we also documented a shareholders agreement for her which covered issues such as shareholder meetings, issuing shares and selling shares. The shareholders agreement also set out methods of dispute resolution.
As business structuring lawyers, we can help you by setting up a company and preparing a well drafted shareholders agreement.
How does it work?
Please message us so that we can help with your business structuring needs. We can assist with company set up, shareholders agreements, partnership agreements and more.
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