Cultural Enterprise Office

What business structure is right for you?

When embarking on your creative business or artistic practice it is necessary to consider the business structure you think is the most appropriate for your aims and purposes. Often practitioners make the first step as self employed and register with HMRC as such and begin to maintain simple accounts to manage income and expenditure. However, it is worth taking some time to consider the potential clients, funders and investors you may be approaching and what structure may be most suitable, needful or advantageous and if it may be best to set up in the anticipated structure from the outset.

Business structures include:

• Sole trader (self-employed)
• Partnership
• Limited Company (by guarantee or shares)
• Community Interest Company (CIC)
• Charity (SCIO)
• Unincorporated Association
• Trust
• Limited Liabiity Partnership (LLP) 
• Co-operative

Making the choice depends on a range of factors which will lead you to a few options to consider, or narrow it down to one obvious structure such as:

• What are the aims, purposes and values of the organisation you are embarking upon
• Are you aiming to create a structure that allows you to operate as a sole creative practitioner
• Do you work regularly with a business person or another creative or other expertise that would make a partnership a suitable model, would you each agree to share liability as well as profit, or limit liability
• Do you project that you will recruit staff employed through your business or  will you ‘hire’ talent, services and expertise who are also self employed or trading through a Limited Company remunerated at their agreed fee for their work/services
• Are the aims for your organisation for profit, or not for profit
• Will there be members of the organisation who share in the investment and share in the profits
• Is there any advantage in a particular structure given the predominant source of income, for example, grant income, donations and fund raising may be best facilitated through a charity, trust or community interest company, and if there are trading possibilities would there be an associated Limited Company
• Is there a group of like minded talented individuals you can pool together to form a co-operative to deliver the business or social service together
• Who owns the assets that are being brought into the business and would these be protected as such or become assets of the organisation?

Your answers to these questions will start to shape the options that are the best fit for you. We recommend that you take advice from a legal professional or discuss your options with our one of our Legal Industry Associates before finally establishing your business structure.

Want to know more? Take time to consider the various models in our downloadable guide at the top of this page.