Sole Trader

This is the simplest form. You do not have to register the name of your business with any authority. You can use your own name with no problems. If you want to use a trade name like ‘Ski-needs’ or ‘Movers’, you had better be sure that no one else close enough can accuse you of trading on their name (which they may it is too similar). If you use a trade name you must show your name and address as proprietor on all business stationery and on a notice in the business premises, and anywhere you are working where the public have right of access. You do not have to submit accounts to Companies House, neither are you subject to the laws affecting company directors under the Companies Acts.

Partnership

This is firm with two or more proprietors. The same conditions apply as a sole trader. However, when it comes to liability for debts, the law says that all partners are jointly and severally responsible. This means that the people to whom you owe money can, in the last resort, sue any one partner for the whole lot. So if your partners take flight, you are liable to pay their business debts as well as your own share. However friendly you may be with the people with whom you are going into partnership, you are well advised to have a partnership agreement. You need a solicitor to do it properly for you.

Limited Company

A company must have at least two shareholders, one director and a company secretary who could be a second director. The company’s money will be contributed by people who are allocated shares in the company. The value of shares in the company is not necessarily equal to the money they have contributed, but may be more or less according to the balance sheet. The balance sheet states the values of all the assets, debtors, creditors, loans, profits and losses; and, broadly speaking, the net figure is regarded as the value of the company. That value divided by the number of shares issued is the value of each share. It the company is unable to pay its debts, shareholders’ liability is limited to the amount equal to the nominal value of their issued shares.

Co-operative

A co-operative is a form of business provided for at law by the Industrial and Provident Societies Acts 1965-78. It can also be registered under the Companies Act 1985. The difference is that under the former it requires seven members to form a co-operative, and under the latter, only two. The principal requirements governing formation are:

§         Every employee may be a member

§         Every member owns a share of the business

§         Every share carries an equal voting right

§         Profits are shared by democratic agreement

§         Financial investors need not receive preferential reward