When you are forming any kind of business, including a hospitality business, one of the most important things to consider in the early stages is whether you wish to operate as a sole trader or a company. If there are two or more of you operating as sole traders together, for example if you are planning to open a B&B jointly with a friend or family member, you will become a partnership. The decision will largely depend upon the size of your business, its assets and its turnover, and there are advantages to both courses of action.
Being a sole trader is generally simpler, as there are more legal formalities and administration tasks involved in running a limited company, such as filing annual returns and dealing with the company registrar, which will require the use of a professional accountant. A sole trader will also have greater control over the way they run their business.
However, as a sole trader, you will also be running greater risks, as you will be personally responsible for all debts and will run the risk of losing your investment and assets if the business should happen to fail. Limited companies have greater financial protection, and many also be seen by customers and financial lenders as being more professional and prestigious than independent companies.
Generally, people operate as sole traders when they own a smaller independent company, whereas businesses which make profits of more than Â£30,000 will be registered as limited companies. You may wish to start off as a sole trader and register with Companies House as your business expands and grows. Ultimately, it is always best to seek the advice of legal and financial professionals when you are determining whether to operate as a limited company or a sole trader.
Whatever course of action you choose to take, we can provide the professional help you need to secure that all important bed and breakfast finance to get your business off the ground.