There are many differences between the types of UK business and startup set ups to choose from, all of which will require different rules and regulations when it comes to accounting. With any business model, there are certain requirements, which, much like your inevitable office search, will potentially be quite stressful. Accounting requirements will be involved when setting up your business and this alone is often a very stressful and time-consuming process.
Implementing useful tools such as accounting software can help to alleviate these stresses, as can understanding and integrating the correct set up for your business, much in the same way that finding the ideal office space provider will give you the peace of mind you crave (source: Brentano). To further assist, there are comparison websites which can assist you in your selecting the best piece of accounting software for your business’ needs and circumstances.
The UK is saturated with business potential, with recent figures showing that over half (64%) of the county’s workforce want to create their own business. With so many Britons having entrepreneurial spirits, it’s important to share the different types of business set ups out there, helping those to make their startup dreams a reality with a model that best suits their business.
Public Limited Companies (PLC)
A PLC is a type of business set up that is ‘limited’ by share. The company’s shares are available for members of the public to purchase, meaning that anyone can be a shareholder provided they meet the requirements for purchase of shares (e.g. funds). With these types of companies, there are typically more legal obligations to consider as the company is directly involved with the public.
These legal obligations may include having to have two directors of the company, a secretary, and a certain minimum amount issued share capital. There are many different accounting obligations for PLCs to abide by in the UK, one of the main ones being that they must provide copies of the business’s annual accounts (statutory accounts) to HMRC, Companies House and shareholders.
One of the most commonly used business set ups throughout the country today, a sole trader is a type of business model different from the other, in the sense that it is not recognised as a separate legal entity from the business owner (more about becoming a sole trader). Sole traders are not legally required to register with Companies House, but they do need to tell HMRC of their establishment as a sole trader for tax reasons.
A sole trader involves one person who owns their business exclusively, and therefore keeps any and all profits (after tax), and is also liable for any losses suffered by the business. Therefore, whilst setting up a business as a sole trader may come with less regulations than other established company set ups, it does usually come with the biggest risk to that one business owner if losses do occur.
What is a Private Unlimited Company?
Unlike most other limited companies, the shareholders of a private unlimited company all have the exact same amount of liability for any debts the business suffers. This type of business model is quite different from the rest, and is not used that often throughout the UK, or indeed the rest of the world, being one of the rarest types of models used when setting up a business.
Private Limited Company (Ltd.)
A private limited company (Ltd.), is a type of set up in which the business is limited by private shares (read more about setting up a limited company in the UK). Unlike a public limited company, the public cannot buy shares of this organisation, and shares are only available to private investors. With this type of business model, unlike the sole trader, the liability is diffused across a range of different people involved in the business. For example, the shareholders are responsible only for the percentage of their shares in the business.
Private Limited Company (LBG)
Although very similar in name, a private limited company (LBG) is substantially different to a private limited company (Ltd.), in the fact that an LBG has no shareholders. This type of organisation is typically either a charity or a non-profit, and those who invest in the company are not liable for any losses the business suffers. The board members of the organisation will be the only ones liable for any losses the organisation suffers.
Limited Liability Partnership (LLP)
Instead of shareholders, a limited liability partnership (or LLP) will have partners, who are not only liable for their share within the company, but will each hold an equal amount of responsibility as the other partners of the business. The considerable amount of liability these partners have do however come with benefits, as the partners all directly control and manage the company – a position that not all shareholders of other limited organisations can do.