Choosing the right structure means thinking through several factors specific to your situation. This isn't a checklist exercise - it requires understanding what matters most to you.
Liability protection
How much risk are you comfortable with? If your business activities could expose you to claims or debts, structure matters. A company provides a layer of protection (with some exceptions), while a sole trader has none.
Consider what could go wrong, product liability, client disputes, employee claims, supplier debts if cash flow tightens. The more potential exposure, the more protection makes sense.
Tax implications
Different structures are taxed differently. Sole trader income is taxed at your personal rate. Company income is taxed at 28%, but there are personal tax implications when the company distributes its income to shareholders.
Talk to your accountant. Tax considerations are complex and depend on your specific financial situation. Your accountant should advise on tax implications. We handle the legal structuring; they handle the tax planning.
Ownership and partners
Are there multiple owners now, or might there be later? If you want to bring in partners, investors, or family members, a company structure makes this much easier. Share ownership can be divided, transferred, or sold.
Multiple owners also means you need to think about decision-making. Who controls what? What happens if owners disagree? A shareholders' agreement addresses these issues.
Growth plans
What do you want the business to look like in five years? Ten years? Some structures support growth better than others. Companies can issue shares, take on investors, and be sold more easily.
Compliance tolerance
Companies come with obligations; annual returns, director duties, and accounting requirements. These are manageable, but they require attention. If you want maximum simplicity, a sole trader structure has the least compliance.
Questions to ask yourself:
- - What activities could create liability?
- - What is my current and expected income level?
- - Will I have partners or investors?
- - Do I plan to sell the business eventually?
- - How much administration am I willing to do?
What we do at this stage
We help you work through these factors systematically. We ask questions to understand your situation, explain the implications of each option, and make a recommendation based on what you tell us.