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Choosing a structure for a client’s business

You may have business clients who don’t yet have a business. Approaching you as an accountant may be a very good first step – it is certainly a sign that they are serious about running their business in the most professional way possible.

There are many areas where potential business owners may seek your help, but one of the first steps will be helping them to decide on the best legal entity for their business.

The business legal structure that you recommend will depend on the clients business plans – and, of course, it will affect their tax obligations. So ensuring that clients understand the possibilities, advantages and drawbacks of each business type is a vital part of the advice you give.

Of course, your clients will not want – or understand – all the technical details. So here is a basic guide to the options,  with just the details your clients need - which should help you ensure that you don’t confuse them too much.   

Sole trader

Being a sole trader is of course simply being self-employed. The person running the business is its sole owner and in full control of it – which means they are personally responsible for all debts.

On the positive side, it means that the business owner can keep all the profits after paying tax and National Insurance.

It can be an easy way to start a business on a part-time basis, as an owner can be a sole trader running their own business as well as employed elsewhere. Many clients may work full time as an employee, but want to run a business on their own account in the evenings and at weekends.

Of course, this does not mean that the requirement of tax reporting is in any way reduced. Your client will need to keep financial records of all their business activity and will probably ant your help to submit these figures to HMRC each year.


A business partnership is a step up from working as a sole trader, in that it must involve two or more people as business owners.

They will share the business profits and the personal responsibility of any debts.

Partnerships must choose a name to operate under – although this can, of course, be the names of the partners.

Each partner must register as self-employed and is responsible for submitting information and paying tax on their own share of the profits.

One of them - the nominated partner must take responsibility for managing the bookkeeping and providing tax information on behalf of the partnership itself. Each partner must register as self-employed with HMRC and pay tax on the income they earn from the business.

Partnerships should have a formal partnership agreement that shows how profits will be split.

Limited Liability Partnership (LLP)

An LLP is a next step up the business hierarchy. Unlike a sole trader business or partnership - which means those involved are wholly responsible for any debts - an LLP is like a limited company, in that partners are not liable for debts.

There must be more than one partner classed as  ‘designated members’, and responsible for filing account information. All partners will be classed as self-employed and must register accordingly.

LLPs must register at Companies House. You can do this on their behalf.

Limited Liability Company

You know the advantages of a limited liability status for your clients and may try to steer them towards it.

The key advantage to your clients is that the business is a legal entity, therefore independent of the people who founded and own it. Their personal assets are therefore protected against any loss caused by the business.

Of course, there will be complications – the need to deliver full accounts each year and to pay corporation tax – but you will be able to discuss why this may well be a price worth paying with your clients.

Again, you will probably be able to take care of company formation at Companies House. 

What else will clients need when they start up? 

In addition to help with deciding on and registering up the business structure, clients setting up in business will have another pressing need that they may want your help with - the need for funding. Financing any new business can be a challenge - many lenders will refuse to lend to start-ups as they resent an unknown level of risk

At Rangewell, we are experts in business finance and can help you find funding solutions even when your clients are startups. 

Not only do we know all the different types of business funding available, we know the lenders who can offer the most competitive rates. Loans, Asset Finance, Commercial Mortgages or any other kind of finance - when your clients are ready to start up and need your help to secure the funding to turn their plans into reality, you can simply turn to us for the solutions they need. 

Not only are all our services free for you to call on as an accountant partner, we make no charge to your clients. In fact, we may be able to pass commission from lenders on to your practice. To find out more about working partnership with Rangewell to find better answers to your clients' funding needs, call us at Rangewell on 020 3637 4150 - or email  [email protected] Our service is free.

Our service is:


Transparent and independent, treating all lenders equally, finding the best deals.


Every type of finance for every type of business from the entire market - over 300 lenders.


Specialist Finance Experts support you every step of the way.


We make no charge of any kind when we help you find the loan you need.