What type of trading vehicle is best to use for doing business in the UK? What are the different types of trading structures and how do they differ? 

This is a freeview 'At a glance' guide to trading structures commonly used in the UK.

At a glance

When you start a business you must operate through a trading structure or 'vehicle'. Three types of structure are commonly used in the UK:

  • The sole trader.
  • The partnership.
  • The company.

There are different variations of partnerships:

  • Conventional partnership.
  • Limited partnership.
  • Scottish Limited Partnership.
  • Limited Liability Partnership (LLP).

There are different types of company:

  • Private company
    • Limited by shares.
    • Limited by guarantee.
  • Public company.

Business vehicles can also combine to operate together as joint ventures, partnerships, companies and groups of different combinations of these.

Brexit

From 1 January 2021, it is no longer possible to form entities within European regulations.

There were two alternative vehicles that could previously be formed in the UK for activities within the EU up to 31 December 2021:

  • The European Economic Interest Grouping (EEIG).
  • The European company, Society Europaea (SE).

Businesses who want to trade from Europe using entities which conform to the EU regulations will need to form suitable trading vehicles in the state of their choice.

If you start a business in any other country than the UK you will find a range of additional trading vehicles. These may be similar to those used in the UK, but different legal principles will apply. It is recommended to appoint a local adviser to set up your business as it cannot be done remotely.


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