The structure of your business

The main ways you can run a business are as an unincorporated business, for example as a sole trader or partnership; or by using a company. It is best to take specific professional advice before making a decision.

A company is a separate legal person. You will normally be a director, employee and also a shareholder in your own company. You can take money out of your company as salary or by paying dividends.

If you are a sole trader or partnership, your business is not a separate person from you (in England and Wales). As a sole trader, you are taxed as a self-employed person on the profits. As a partner, you are taxed in a similar way to a self-employed person, but just on your share of the total profits of the partnership.
There are other forms of business structure including limited liability partnerships and social enterprises. You can find out more about these on the Government’s services and information website at https://www.gov.uk/browse/business/setting-up.