Prospective entrepreneurs should carefully choose the legal structure and organisation of their future business.
Why is it important to consider different legal structures?
Legal structure affects the following aspects of any UK business:
Types of Legal Structures
This is the simplest way to set up and run a business: ownership and control of the business rests with a single individual. Regulation for the sole trader is minimal: there is no requirement for a formal constitution and registration with the Companies House. However, being a sole trader is regarded to be risky, as the individual is not separate from the business and has sole unlimited personal liability for the business. This legal form can be suitable for small businesses.
There are three types of partnerships:
A Partnership is a relatively simple way for two or more legal persons to set up and run a business together with a view to profit. A partnership can arise, without any formal agreement, when people carry on a business in common, but typically there is an agreement to trade as a partnership. Partners will usually draw up a legally binding partnership agreement, setting out such matters as the amount of capital contributed by each partner and the way in which they will share the profits (and losses) of the business. Again the Partnership has no separate legal personality. Partners share the risks, costs and responsibilities of being in business.
A limited partnership has two sorts of partners: general partners and limited partners. The form is similar to a Partnership, with the main differences being that the limited partners may not be involved in the management of the business and their liability is limited to the amount that they have invested in the partnership.
Limited Liability Partnerships (LLPs).
LLPs must have at least two designated members – the law places extra responsibilities on them. LLPs must register with Companies House, send Companies House an annual return and file accounts with Companies House.
A private company is a firm held under private ownership. Private companies may issue stock and have shareholders, but do not trade on public exchanges. A private limited company may be limited by shares or by guarantee.
A private company:
Public Limited Companies (PLCs)
PLC is a company that has shares that can be purchased by the public and which has allotted share capital with a nominal value of at least £50,000.
Can the legal structure of the business be changed?
Yes, as the business grows and changes. it may become appropriate to change its legal structure. It is strongly advised that you seek professional advice before changing the business structure as you will have to meet certain legal obligations.
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If you have been granted indefinite leave to remain (ILR) in the past few years, you will probably have been issued with a Biometric Residence Permit (BRP) with an expiry date of 31 December 2024.
From 1 January 2020, applicants who are granted five years limited leave to remain have also started to receive BRP’s endorsed with an expiry date of 31 December 2024.
Our client, a non-EEA national, initially obtained a residence card as the spouse of an EEA national. Our client subsequently divorced from his EEA national spouse and obtained a residence card under the Retained Rights route. The client then applied for permanent residence, which was refused and a subsequent appeal was dismissed by First-Tier Tribunal as the Judge wrongly thought the client needed to be a qualified person, not his EEA national spouse during the time their marriage lasted. Permission to appeal on this basis was granted.
Our immigration team achieved great success in representing a client in her appeal against the Home Office’s decision to refuse issuance of the Residence Card as an extended family member of an EEA national.
Our client, a Ukrainian national entered the UK as a Family Permit holder and was residing in the UK as an extended family member of an EEA national (her father-in-law was Portuguese). Our client lived with her husband and son, whose residence in the UK was also dependent on the same EEA national.
Two successful applications for leave to remain under the parental route. Our clients both parents of children in the UK had no status in the UK when they approached Sterling Law.