Forms of business vehicle
Forms of business vehicle

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Forms of business vehicle
  • Sole trader
  • General partnership
  • LP
  • LLP
  • Company

It is important that the most appropriate form of vehicle is chosen to carry on a business; the choice of vehicle may have a bearing on the business’s success or failure.

Not every vehicle will suit the needs and demands of a business. Each vehicle has its advantages and disadvantages. The decision as to which vehicle to use to carry on a particular business will be complex and is dependent on various legal, tax and commercial considerations; there may not be a perfect fit.

In addition, the vehicle originally chosen to carry on a particular business may not continue to be the right choice for that business as it develops and matures. The vehicle chosen to carry on a business should be kept under periodic review. If the original choice of vehicle to carry on a business becomes unsuitable, an alternative vehicle may take over that business, although a change of vehicle may be costly, depending on the circumstances.

Among the most common forms of vehicle used to carry on business in England and Wales are:

  1. a sole trader

  2. a partnership

  3. a limited partnership (LP)

  4. a limited liability partnership (LLP)

  5. a company limited by shares

  6. a company limited by guarantee, and

  7. an unlimited company

The key tax features of each of these forms of vehicle is outside the scope of this Practice Note. For the