If you are considering self-employment, you will need to think about the different ways of trading and which would be most appropriate for your business.
Most businesses register as a sole trader, partnership or limited company.
Your new business could take another form so please follow the links below to read about how they work:
Sole trader
You run your own business as an individual and are self-employed:
GOV.UK - Set up as a sole trader (external website)
Partnership
You run a named business with a nominated partner:
GOV.UK - Set up a business partnership (external website)
Limited company
You run a named company with an address and one or more directors:
GOV.UK - Limited company formation (external website)
In addition to one of the above legal forms, self-employment can also involve one of the following trading practices:
Co-operative
You run a business with others as part of a group, acting together for the mutual benefit of all members, sharing ownership and making decisions together:
Cooperatives UK - Plan your co-operative (external website)
Franchise
You run a business that is licensed by another business to use its products, services, name or brand:
The British Franchise Association (external website)
Starting a social enterprise or nonprofit company
If you are looking to start a business with social aims and objectives then a social enterprise or nonprofit model may be suitable.
The main premise of this type of business is that profits generated are invested back into the business to allow it to continue, or are distributed in line with the business aims and objectives. Those running a nonprofit business can still earn a wage from them.
This type of business can sometimes attract external funding to support its activities but the market for funding is very competitive so you cannot rely on grants to set up and for the ongoing costs. The business should, ideally, generate income from its activities or from other fundraising to supplement any grants which may be available.
GOV.UK - Set up a social enterprise (external website)