What is The Business Structure?

Business structure refers to a way of doing business. There are three types of commonly used business structures in today's business environment.

1) Sole proprietor:

These are individually owned business and have no separate existence. They are taxed under income tax section rather than corporation tax sector. Profit and loss are not limited to the investment in the business and individual can be made liable to compensate for the losses of the business.

2) Partnership concern:

These are the type of businesses which are similar to sole proprietor but are mutually owned by 2 or more partners. These are also taxed under income tax section rather than corporation tax. Profit and loss in their case are also not limited to the investment made in the business and partners can be compelled to pay for the compensation falling short because of lesser investment and greater loss made by the business. The benefit of the partnership is that investment pool is increased because of more investment and loss exposure of the business is also reduced per owner of the business. Partners can exhibit their personal contacts for the growth of the business and expand the business by their personal marketing skills. It has lesser compliance as compared to the limited liability companies. To run a partnership In UK, businesses have to register a partnership same as to register the firm UK.

3) Limited Liability Company.

Businesses need to register to follow this type of structure. Limited liability is the specialty of this structure as it protects the shareholders from loss exceeding their investment in the business as Limited Liability Company is a separate business entity from its shareholders. Compliance of the limited liability company is the biggest issues of this type of business structure as a lot of costs has to be incurred by the limited liability company to comply with all the code and legal compliances to register business and run it.


There are two types of Companies.

Private limited company:

Private companies are not listed on the stock exchange as its shares are not available to the general public. Investment shares are privately held and sold through placements. Compliance is relatively low in private companies because the public interest is not involved in the company. These companies have a relatively lower excess of financing pool.

Public limited companies:

These are the limited liability companies of whom shares are offered to the general public in the stock exchange. Public companies can be listed on various stock exchanges at the same time and can offer their shares to each of the stock exchange separately. Compliance level of public listed company is highest because public interest has to be protected to avoid financial frauds and misappropriations of assets.Companies in the UK are registered under Registrar of company's office.

K Benjamin Photo This Article is written by K Benjamin, professional writer at Weaccountax , an accountancy firm provides register a company , services at affordable prices.

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