What Are The Different Types Of Business Structures?


There are a few different types of business structures that you should know about. Each one has their own advantages & disadvantages!

The most common types of business structures are:

  • Sole Trader
  • Partnership
  • Limited Liability Partnership
  • Limited Liability Company

Sole Trader

A sole trader is just a business that hasn’t been registered with Companies House. You pretty much just wake up and start running your business, it’s simple.

Remember that as a sole trader you will be personally responsible for the debts of the business.

When you are in the process of proving your business idea works & can make a profit, I usually recommend people run their business as a sole trader or partnership.

There is no point forming a company when you don’t actually have a business that can be sustainable.


A partnership is pretty much the same as a sole trader, it’s just where two or more people come together instead of just one.

Both partners will be responsible for any of the debts the company has.

Limited Liability Partnership

This is a company that has actually been registered with Companies House. A limited liability partnership (LLP) is where two or more people share profits in a company & protects each partner from some of the debts the LLP may have.

Limited Liability Company

This is pretty much one of the most popular type of business in the UK. With a Limited Company your business is a completely separate thing from you.

This means that you are not personally responsible for debts the company might find itself in. Some people call this limited liability.

Quick Summary

So those are pretty much the different business types that you need to know about. If you want to open your own limited company, check out or How to Form Your Own Limited Company guide.

I normally recommend people use these websites to set up their new company, they make things cheap, quick and easy:

Your Company Formations
My New Favourite

These guys have become my new favourite as their service is so easy to use. They have a little tool which allows you to search for the perfect new company name. Plus they are really cheap, £12.48 for their digial company formation pack.

Companies Made Simple
Cheap, Quick & Easy

These guys make forming your new company really easy. Their company formation packages start at £15.99+ VAT and they usually set up your new company within 1-2 working days.

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