Which type of business is best suits you?

It is vital that you choose the best type of business for your needs. So how do you decide?

We at Muftals operate and advise our clients to operate within the law but by all means arrange your affairs so as to reduce your overall tax liabilities.

The vast majority of our clients choose to operate through their own limited company, although we describe each option below:

Business Structure

Limited Company

Trading through a Limited Company has become increasingly popular, due to flexibility, security and tax efficiency. A Limited Company has a separate legal entity from the owners, even if you own 100% of the shares. The profits and assets of the company belong to it, not you as the shareholder; profits made by the company are withdrawn by dividends to the shareholders or as salary to employees. Apart from advantages such as limited liability, the main advantage of operating through a limited company is that profits can be extracted by dividends, rather than as salary. Because dividends are not subject to National Insurance contributions, the savings can be very beneficial. Whilst there are other trading options detailed on our website, these rarely prove to be either as tax efficient and/or compliant with tax laws. If you are contemplating starting your own business, these are aspects that you do need to consider. We are confident that you will find that the process is more straightforward than it may first appear.

Sole Trader

If you’re a sole trader, you’re running your own business as an individual. You can keep all your business’ profits after you’ve paid tax on them. You can take on staff - ‘sole trader’ means you’re responsible for the business, not that you have to work alone. This is a common, low cost, way of operating a business. If this approach is what you choose we will assist with HMRC registration, VAT registration, record keeping and we can even assist with opening a bank accounts.

Partnership

In a business partnership, you and your business partner (or partners) personally share responsibility for your business. You can share all your business’ profits between the partners. Each partner pays tax on their share of the profit. You’re personally responsible for your share of any losses your business makes and bills for things you buy for your business, like stock or equipment.