Weighing up the options: partnership or sole trader?
One of the issues to consider with UK company formations is whether to enter into a partnership or be a sole trader.
In a recent article for The Guardian, Tim Gregory looked into the benefits and potential pitfalls of the two approaches.
The main advantage of running a company as a sole trader is the amount of paperwork and red tape which is reduced with this approach.
No corporation tax needs to be paid and it is not necessary for the business to be registered with Companies House.
Annual tax returns will be the sole trader’s own responsibility on the other hand and it is riskier in terms of legal liability making a comprehensive insurance policy important.
Partnerships have to register with Companies House and put specific information onto the public record.
Both partners can be liable for the company’s entire debt or they can enter into a limited liability partnership in which case each person is only liable for the money they have invested.