There are several places you can seek advice if you’re thinking about setting up a company. Some of these advice lines will be good in the main but could stumble in other areas if the person chooses to only read one column leader and not the article in its entirety. Discussing one’s plans with friends and existing colleagues can raise several wildly differing opinions as to the correct way forward for this or that. Business advisors don’t sit out in the High street waiting for enquiries to land in their lap, they run busy practices and so appointments have to be made for the simple face to face enquiry. Back to the plot . . . how do you know what sort of legal structure you need for your business. Do you know the difference between a limited company or acting as a sole trader for example. There are different legal risks which must be borne in mind.

Being a sole trader is the usual first step to starting a business. It is possible to move from one legal structure to another although it is more usual to go from sole trader to limited company rather than the other way round. A sole trader is the simplest form to set up; keep records when trading. Sole traders make all their business decisions and actions and keep all the profits after legal stoppages such as tax deductions. There are still some legal responsibilities and of course, some financial ones, when running business as a sole trader. The legal risks or liabilities include unlimited liability which means the owner is personally responsible for all the debts of the business. If something goes wrong, the owner is directly responsible and has less protection than if a limited company. There is business insurance available for this structure; it helps protect business ownders and independent professionals should they have a compensation claim against them for everyday risks such as mistakes, stock or premises damage and legal costs which come under liability insurance. You can also insure against business interruption and supply chain breakdown. This insurance protection means that should your business suffer an unexpected setback, your iasurance company will help you get things set to right and the business earning money again. Having business insurance add credability to the business too. It demonstrates to customers and prospective employees that you are trustworthy and good to do business with.