smallbusiness.co.uk: Helping your business think big

Short-term finance

Rory Earley, CEO of Capital for Enterprise, explores the options...
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Q: What are the advantages to a limited company or partnership?

Jul 01 2009

If there is a chance that the business might lose money in the early years, then it will almost certainly be beneficial to set it up as a partnership initially – this will create the possibility of getting some tax back. If on the other hand the business is expected to make more money than you intend to withdraw yourselves, then running as a limited company will probably reduce your overall tax bill.

It is possible to start as a partnership and subsequently convert to a company, whereas the reverse is much more difficult.

I suggest that advice is sought on this subject - possibly from your local Enterprise Agency who often offer free or subsidised meetings with appropriate professionals.

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