Should we form a general partnership or limited company, or stick as a sole trader?

By : Forum Member
Published 26th January 2021 |
Read latest comment - 23rd February 2021

I am about to buy a small dance company with my husband. We both work there and the current owner is retiring so we're taking over. We hire a venue and dancers pay monthly membership fees to attend regular classes. We expect the profits to be relatively low.

I'll be running the business with my partner - we are experts in our field but total newbies when it comes to business. We are currently both self-employed. We have no idea if we should remain sole traders, form a general partnership or form a limited company. I've done lots of research but I'm struggling to judge the pros and cons and reach a conclusion. Any advice would be greatly appreciated.


kyla_78
Comments

I would say. If you are able to stay as a sole trader as long as you can  ,unless you want to increase your fees to cover the costs of all the things that go with it, but then I am sure you will loose customers


Thanks
Andy-C | Pewter World

The old rule of thumb was that if you are making 50k profits or more that it's more tax efficient to be a limited company but I'm not sure if that's still the case. 

I would ask an accountant! They are brilliant at this type of thing. I assume you'll have the figures from the company you're taking over and it would be prudent to get that all checked over anyway. 


Sorry a bit late to this one.

The thing that would make me nervous staying as a sole trader would be the risk of liability, particularly with your type of business. So for me personally, I would go the Ltd route. There's no real increase in fees unless you currently do your own books and can file a tax return, and if you stay under £85,000 turnover, you don't need to worry about VAT.


Steve Richardson
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