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The liability for debts that cant be paid in a limited partnership is split
among partners.
Partners responsibilities differ as:
The partners in an LLP arent personally liable for debts the business
cant pay - their liability is limited to the amount of money they invest
in the business.
Overview
Sole trader
Limited company
'Ordinary' business partnership
5. Limited partnership and limited liability partnership
6. Unincorporated association
7. Change your business structure
6. Unincorporated association
An unincorporated association is an organisation set up through an
agreement between a group of people who come together for a
reason other than to make a profit, eg a voluntary group or a sports
club.
You dont need to register an unincorporated association, and it
doesnt cost anything to set one up.
Individual members are personally responsible for any debts and
contractual obligations.
If the association does start trading and makes a profit, youll need to
payCorporation Tax and file a Company Tax Return in the same way
as a limited company.
sole trader
business partnership
limited company
limited partnership
limited liability partnership (LLP)
Tell HM Revenue and Customs (HMRC)
If you employ people, youll also need to talk to HMRC about the
change.
Sell your business
If you want to close down your existing business structure, follow the
usual steps.
To no longer be a sole trader
Youll need to:
Limited provides an expert service for all your company formation and company law
requirements and there are more details about these types of companies on the ISL website.
Unlimited companies
Many people refer to a sole trader's business or a partnership as an unlimited company, but such
businesses are not in fact companies. It is possible to register at Companies House a private
company which is unlimited, that is the members accept complete liability for the company's
debts. If the company needs money to pay its debts a call can be made on each of the
shareholders to contribute a fixed amount on each share held by them.
An unlimited company has all the other features of a private company limited by shares. It is
registered at Companies House, has members (usually shareholders), directors, articles, etc. Its
one major advantage is that it is not required to register annual accounts at Companies House.
This type of company is suitable for a business where the risk of insolvency is very low or nonexistent, or where it is important not to put the company's accounts on the public register at
Companies House. There are few unlimited companies, but this may be because their existence
and advantage are not widely appreciated.
For more advice on the practical aspects of forming an unlimited company company and running
it once registered,contact Incorporation Services Limited.
rather than for private profit. CICs can be limited by shares or by guarantee. For more
information about CICs, go to the Community Companies website.
For more advice on the practical aspects of converting one type of company to another, please
contact Company Law Solutions.
TYPES OF COMPANY
The following gives a brief guide to the various types of companies that can be incorporated in the UK and
their various principal characteristics. More detailed information can be found under each separate heading
within this section and in the customer support section. Use this list and the links provided to help decide
which company formation you need.
The types of company we can incorporate for customers include:
Objects unrestricted
Limited companies are often advantageous for their shareholders regarding taxation
Takes longer to complete registration of new directors and transfer shares to new owners
More expensive
A Guarantee company is not owned by its members and cannot be transferred by its members for
value it has no share capital
Some input required from client to establish main objects if required or objects can be unrestricted
A private company can be converted to a PLC, so most PLCs start life as normal private companies and
convert at a later date prior to flotation of the stock markets
Suitable for new and existing partnerships wishing to obtain limited liability status, and aimed
particularly at professional partnerships such as accountancy and solicitors firms
Beneficial for property developers planning to sell flats or apartments in a development once
completed
Can be used to spread the freehold of a number of flats across the individual owners allowing easy
transfer and sale of each flat
Can be used purely as a vehicle to manage the maintenance of a property comprising of several flats
or apartments
Allows leaseholders to purchase freehold properties or acquire the rights to manage a property under
the Commonhold and Leasehold Reform Act 2002
Intended for use by social enterprises who wish to utilise their profits and assets for public benefit