UK business structures
A business in the UK is set up under one of three main structures: sole trader, limited company or limited liability partnership. The choice determines two things — who is liable for the debts and whether tax falls on the company or the individual.
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| Structure | Liability | Tax falls on |
|---|---|---|
| Sole trader | Personal, unlimited | The individual |
| Limited company | Limited to the company | The company |
| LLP | Limited to the LLP | The individual members |
Registration is a single administrative step, but the structure chosen before it shapes liability and tax for as long as the business runs. The registration itself is at UK company formation.
01
Which business structures exist in the UK?
GOV.UK states that most businesses register as a sole trader or a limited company, with the limited liability partnership as the third common structure. Moving between structures is possible, and many businesses begin as sole traders.
02
What is a limited company?
A limited company is a legal person separate from its owners, run by one or more directors. Under limited liability the debts of the company do not fall on the founders personally, and the company pays corporation tax on its profit.
Separation is the whole point of the structure, and it comes with public filing: accounts and the register of people with significant control are visible to anyone. That trade-off is the decision, not a side effect of it.
03
What is an LLP and how does it differ from a limited company?
An LLP is a partnership structure formed by two or more members, and the members are not personally liable for debts the business cannot pay. The clearest difference from a limited company is in tax: members are taxed as individuals.
Because profit is taxed in the members' hands rather than in the partnership's, an LLP behaves like a partnership for tax and like a company for liability. That combination is why professional firms commonly use it.
04
What is a sole trader?
A sole trader is, in GOV.UK's own words, the simplest structure to set up and to keep records for. The founder makes every decision, and after tax the whole profit belongs to them rather than to a separate legal person.
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05
Which structure suits which situation?
The choice rests on three questions: whether you accept business debt reaching your personal assets, how many people the profit is shared between, and whether you have an accounting arrangement able to carry the administrative load.
None of the three answers is a matter of opinion once the facts are known, which is why this decision is normally made with an accountant rather than alone. The tax consequences of a change are the part that is hardest to reverse.
06
What does British Global do on structure choice?
British Global prepares the decision for you: it sets out the shape of the business, the number of partners and your expectations in a written preliminary report and narrows the options. The final decision goes to an accountant.
Accountancy and tax work is carried out by a professional whose membership is verified on a public register; British Global sets out the position and refers.
07
Frequently asked questions
Can a business change structure later?
Yes. Moving between structures is permitted, and many businesses begin as sole traders and later incorporate.
Does a limited company protect personal assets?
A limited company is a separate legal person, so its debts do not fall on the founders personally. A personal undertaking given to a lender sits outside that protection.
Is a sole trader on a public register?
No. A sole trader is not registered at Companies House, so there is no public filing of accounts or control.
Sources
- GOV.UK — Most UK businesses register as a sole trader or a limited company, with the limited liability partnership as a third structure; the sole trader is the simplest to set up and keep records for. — 26 August 2026
- GOV.UK — A limited company is legally separate from the people who run it, is run by directors and pays corporation tax on its profit. — 26 August 2026
- GOV.UK — An LLP is formed by two or more members who are not personally liable for debts the business cannot pay, and members are taxed as individuals. — 26 August 2026
