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Methods of trading

by Vera Hughes and David Weller

Sole trader: This is for a one-person business. You do not need to register with any official body, but you do need stationery with your name and business address. You must inform the DWP that you are self-employed. You are personally liable for all your business transactions and debts.
Partnership. This is for two or more people working together in the business. You do not have to register your business, but you must have stationery with your business name and address and the partners’ names. All the partners are collectively and individually liable for the debts of the business. The partnership ceases instantly upon the death of any of the partners, so take out life insurance. A limited partnership combines the flexibility and status of a partnership with limited liability for its members.
Limited company: Your business liability is limited to the business. You must register with the Companies Registration Office (www.companieshouse.gov.uk). Your company’s stationery, including your outgoing emails, must show its name and address, place and number of registration and the names of all or none of the directors. Your accounts must be properly audited by a registered auditor. You also need a Memorandum and Articles of Association; ask your solicitor.
Other methods include a franchise, where you trade under a well-known name, but have less autonomy, or multi-level marketing, selling products in other people’s homes.


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