Establishing a legal structure is a critical step for any entrepreneur who wants to start a business. The legal structure you choose will determine the level of liability protection, tax obligations, and management structure of your business. In this article, we'll discuss some key steps to consider when establishing a legal structure.
First, determine the type of legal structure you want to establish. There are several legal structures to choose from, including sole proprietorship, partnership, limited liability company (LTD) and limited liability partnership (LLP). Each type of legal structure has its advantages and disadvantages, so it's essential to carefully consider your options and choose the structure that best meets your needs. My advice would be to also speak to an accountant who can also advise you on the various tax implications, obligations and opportunities of each of these options.
Second, register your business. Depending on the legal structure you choose, you may need to register your business with companies house, HMRC, and so on. This will include obtaining a business registration number, opening bank accounts, and if necessary filing some paperwork to HMRC which you can do through your nominated accountant if you'd prefer.
Third, obtain the necessary permits, licenses and insurances depending on the type of business you plan to start. You may need to obtain permits and licenses from your industry ombudsman or government agencies depending on your sector.
Fourth, establish a management structure. If your starting as a solopreneur I would still consider having some foresight as to how things may map out and unfold and future-proof yourself accordingly. Depending on the legal structure you choose, you may need to establish a management structure that includes a board of directors, officers, and shareholders. It's essential to have a clear plan for how your business will be managed to ensure that everyone is on the same page.
Fifth, consider liability protection. Some legal structures, such as a LTD or LLP, provide liability protection for the owners of the business. This means that if the business is sued, the owner's personal assets are protected in most cases (ensure you get your own legal advice). It's essential to carefully consider your level of risk and choose a legal structure that provides the appropriate level of liability protection.
In conclusion, establishing a legal structure is an essential step for any entrepreneur who wants to start a business. By carefully considering your options and choosing a legal structure that meets your needs, you can protect your personal assets, comply with legal and regulatory requirements, and establish a clear management structure for your business. The Entrepreneurs Academy and our chosen associates can provide guidance and support as you navigate the process of establishing a legal structure and ensure that your business is set up for success.
Founder & CEO of The Entrepreneurs Academy