When one or more individuals decide to start a business, they have a choice as to what vehicle they operate that business through. In addition to the commercial and legal reasons for that choice (see Practice Note: Forms of business vehicle), the tax treatment of each different form of vehicle will often be a decisive factor in whether it is appropriate for carrying on a particular business.

A summary of the tax implications of running a business as:

1. •

   a sole trader

2. •

   a general partnership

3. •

   a limited partnership

4. •

   a Limited Liability partnership, and

5. •

   a company

are dealt with in Practice Note: Forms of business vehicle—tax summary and Choice of business vehicle—tax comparison table.

This Practice Note draws together some of the main tax considerations that influence the decision of a person or people considering the choice of business vehicle.

As a result it does not consider any Anti-avoidance principles that might apply in some circumstances, such as the personal service company Rules, for which, see Practice Note: Personal service companies—the