Starting a business: Choosing the right structure and legal foundations
Starting a business is an exciting step, but making the right decisions from the outset can save significant time, cost and complexity later on. From choosing an appropriate business structure to understanding your ongoing legal and regulatory obligations, careful planning lays the foundations for long-term success.
Choosing the correct business structure
One of the first decisions for any entrepreneur is deciding which business structure to use, bearing in mind that the best structure for your business may change over time. Choosing the correct structure is an important decision as it will affect the way that your business is organised, as well as its (and your) legal obligations, tax position, filing requirements and liability to third parties.
The most common options in England and Wales are:
- Sole trader: Simple to establish and operate, with minimal administrative obligations, but the owner is personally responsible for the debts and liabilities of the business.
- Partnership: Two or more individuals share ownership, responsibilities, profits and liabilities.
- Private Limited Company (Ltd): A separate legal entity to its owners, a private limited company limits its shareholders’ liability and can offer greater flexibility for growth and investment. It is generally taxed separately from its shareholders.
- Limited Liability Partnership (LLP): Combining elements of both a company and a traditional partnership, an LLP is a separate legal entity to its owners, combining the flexibility of a partnership with limited liability protection for its members. It is tax transparent, meaning that its members are individually liable for any tax charged on the LLP’s income, profits and gains.
- Public Limited Company (PLC): With more compliance obligations than a private limited company, PLCs tend to be used by established businesses wanting access to public investment markets. It is usual for a company to begin life as a private limited company and then to re-register as a PLC if necessary, at a later stage.
The ideal structure for you and your business will depend on factors including liability, tax efficiency, funding requirements, governance and future growth plans.
Registers, records and filings
Companies and LLPs in England and Wales are required to maintain certain statutory records and make regular filings, some of which will be publicly available.
Certain registers must be maintained by the company or LLP itself, while others are maintained through Companies House, which is the government body responsible for incorporating and dissolving companies and LLPs in England and Wales, and for collating the various filings required by such entities.
Depending on the structure of your business, record and filing requirements may include:
- Maintaining a register of members (shareholders)
- Filing updates relating to changes in directors and company officers
- Filing updates to reflect changes to people who have significant control over the business
- Accounting records
- Board and shareholder resolutions
- Annual confirmation statements
- Filing updates to register other changes to the business, such as a change in its name, registered office, constitutional documents or share capital
Other registrations and filings will or may be needed too, for example, with HM Revenue & Customs for tax purposes and HM Land Registry if property is held.
Failure to comply with your register and filing requirements can be a criminal offence, but accurate record keeping is also more than a compliance exercise. It provides transparency, supports good governance and can be critical when seeking investment, financing or preparing for a future sale of the business.
Building a platform for growth
The decisions made at the start of a business’s life can have lasting consequences. Taking time to select the right structure, establish robust governance arrangements and meet ongoing compliance requirements can help create a business that is resilient, efficient and ready to grow.
Building a successful business is about more than meeting legal requirements. It is about creating a strong foundation that supports your ambitions and allows you to focus on what matters most: growing your business and achieving your goals.
Contact us
The decisions made at the outset of a business can have long-term legal, financial and commercial implications. Getting the right foundations in place from day one can help you avoid costly issues and create a platform for sustainable growth. Whether you are launching a new venture, choosing the right business structure or planning for future investment, our Corporate & Commercial team can help you move forward with confidence.
To discuss your plans and explore the options available to you, please get in touch with a member of our team.
Disclaimer: This note reflects the law as at 26 July 2026. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.
