Legal status

Which legal format should you choose?

From a purely financial point of view, it may be advantageous for a new business to start up as a sole trader or partnership, as these are the simplest and cheapest formats to adopt. If necessary, the business can become a company at a later date (but it is more difficult to change a company back into a sole trader or partnership). However, if you are starting a high-risk business that requires a large amount of initial capital, establishing the business as a limited company may be preferable. Generally, the higher the turnover and potential profit, the more reason for trading as a limited company.