When starting a business, one of the first decisions to make is the type of business structure that will be used to operate your business.
If you're setting up alone, you can choose to start as a sole trader (sole proprietor). If you're going into business with a one or more colleagues, a business partnership may be the best option. In this case you will need a Partnership Agreement. A limited company is, however, the most common business type as it is a separate legal entity from its owners and therefore protects personal assets from business risks and liabilities. This is not the case for a sole trader or business partnership, where the owners are personally liable. Therefore setting up a limited company is highly recommended.
As a founder of the company, make sure you have a Founders' Agreement or Shareholders' Agreement in place. This agreement formalises the rights and obligations of the shareholders and also covers important issues such as company administration and day-to-day management. Each shareholder will need a Share Certificate as evidence of their shareholding in the company. You will also need to appoint a director to run the company and a company secretary to deal with the administration of the company. The company secretary needs to record important decisions in company secretarial documents, such as minutes of directors' meeting and resolutions.
Carefully consider what type of business entity is right for you and where you would like to incorporate your business. Different countries offer different tax schemes, and it's easier to start a limited company in some countries than in others.
Dragon Law can help register your company.
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