Self-employment:Types of businesses

Sole traders

Most people who start in business do so as sole traders, working on their own, often from home. They alone receive the income and are therefore liable for any losses or debts. Having no colleagues can be liberating, but might equally be isolating with no one to provide motivation or inspiration

 

 

 

 

 

 

Partnerships

You could set up in business with one or more colleague(s), relative(s), or friend(s). This form of business relationship is usually known as a ‘partnership’. Each partner might be equal or some may have a larger share of the business. Your income and liability are proportionate to your share in the business.

 

Limited companies

As a limited company, the business is registered with Companies House ( There are more regulations associated with running a business this way but these are generally offset by tax advantages. Those directing the company have shares proportional to their involvement.

 

Franchises

A surprisingly high number of well-known commercial concerns are franchises. They expand by getting other people to buy into their business, making an initial payment which secures equipment, raw materials, training and a well-known commercial name, then running a branch of the business to make an individual profit. There are numerous possibilities for franchises throughout the UK. An obvious advantage is that it presents a ’best of both worlds’ scenario. On the other hand, initial outlay can be high and income is not guaranteed. Read the small print, ideally in the company of a solicitor, to be sure that the franchise agreement is favorable to you.

 

 

 Cooperatives

This is a group of like-minded people with similar aims and business interests. Often community based, they are owned and run democratically, with everyone given a say. Profits are returned to members and typically involve employee share schemes. They are not centered on making large amounts of cash, but are frequently creative, practical or founded on ethical values.

 

Charities

The Charity Commission for England and Wales can provide advice and you will have to register with it to qualify for certain tax advantages. Certain trading activities are barred to organizations with charitable status.

 

 

Barristers

It is an ancient tradition that the majority of barristers work at the 'independent' bar. Based in offices or 'chambers' with professional colleagues, their income comes from cases allocated through solicitor contacts and their own clerks. Very junior barristers tend to be offered relatively low level cases. Their fees reflect this, rising as they make their reputation.

Freelancing

Freelancers offer a skill or service to other businesses which employ them as needed for particular projects or for set lengths of time. They may be given office space or work from home, delivering work to (often tight) deadlines. Some freelancers will actively market themselves. Others may obtain work through agencies or by a direct approach from employers.