Are you looking to start you own watch repair business, or expand your already existing watch repair business? If so, it is important that you choose the right business structure for both you and your business. Business structures have a significant effect upon the way your business operates, by determining the financial structure that you will use for its entire existence. In addition, each business structure will contain unique legal requirements that you will have to be mindful of when operating your business. Fortunately or unfortunately, depending on which way you look at it, there are a multitude of business structures from which to choose. Consequently, you should be aware of the positive and negative implications associated with choosing a certain business structure for your watch repair business.
Should I choose a Sole Trader business structure?
Traditionally, many watch repair businesses have chosen a sole trader business structure with which to run their business. This is due to the relative ease with which this structure can be created. In addition, as a sole trader you will have complete control over your business. However, this will also mean that you are liable for all enterprises embarked upon by your business.
Setting up a sole trader business is very simple compared to other types, and certainly the most cost effective. In addition, if you wish to trade under your own name, you are not even required to register a business before you conduct trading. This means that, if you choose a sole trader business structure, you can start your business right away, for little to no cost.
As a sole trader, there will be no separation between you the person and you the business owner. This means that although you may have a personal bank account and a business bank account, you will still be financially liable on a personal level for agreements made as a sole trader. If you are looking to run a small business, with relatively small financial transactions, this is generally not too much of a concern. However, if and when the time comes to expand your business, you may be staking your personal wealth on the success of the business. This is not necessarily a problem, as sole traders do it all the time, yet it should be foremost in your mind when you are deciding whether or not a sole trader is the business structure for you.
Should I choose a Company business structure?
These days, the company business structure has become, by a great margin, the most popular business structure among new businesses. This is due to the fact that a company is considered a separate legal entity to that of the business owner, which is basically the direct opposite of a sole trader. As a result, all the financial liability incurred by a company will remain with the company, and not pass on to the business owner. This is an excellent business structure for businesses looking to expand in the not-too-distant future. However, this does not mean that it is without its drawbacks.
Setting up a company is a costly affair, which means that you will have to spend a significant amount of money before you even open your watch repair business. For many business owners this is less than ideal, as it creates a handicap that can leave your business hamstrung during its first months of operation. In addition, by creating a company you will be required to comply with a complex statutory regime with regard to how the company is run, and how earnings are reported.
The main benefit of a company is the separate financial liability for the company itself. In addition to this, a company may be run into perpetuity, where a sole trader business will end with the death of the business owner. This means that a company can easily be passed on from generation to generation, or to employees within the company.
If you are looking to start your own watch repair business, or expand your already existing watch repair business, it is important that you choose the right business structure. There are a multitude of business structure that you can choose from, which can be daunting at first. However, there will be one structure that suits your needs better than others. The key is being aware of all of the positives and negatives associated with each business structure. A list of possible business structures for your business can be found here. Finally, if you have any further questions relating to business structures, feel free to call LegalVision for a fixed-fee quote.