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Jersey Business Legal Services | Business Legal Structure Choice In Jersey?

You must choose a business structure when you start a business.

The structure you choose will define your legal responsibilities

Types of business

Most businesses in Jersey are:

  • Sole trader
  • Limited company
  • Standard Business Partnership

SOLE TRADER

What is a sole trader?

You’re a sole trader if you’re running your own business as an individual. You can keep all your business’ profits after you’ve paid tax on them.

Sole trader means you’re responsible for the business, not that you have to work alone. You can therefore take on staff.

What are you legal responsibilities?

You’re personally responsible for:

  • liabilities and losses your business may incur
  • bills for things you buy for your business, like stock or equipment
  • keeping accurate  records of your business’ sales and spending

LIMITED COMPANY

What is a limited company?

A limited company is a separate legal entity that you can set up to run your business.

A company is responsible in its own right for everything it does and its finances are separate to your personal finances.

Any profit it makes is owned by the company. The company can then share its profits by way of dividends.

How do you own a company?

Every limited company has members – people or organisations who own the shares in the company

Who runs a company?

The company is run by Directors. Directors often own shares, but they don’t have to.

As a director of a limited company, Jersey Companies law says you must:

  • endeavour to make the company a success, using your skills, experience and judgment
  • follow the company’s rules, shown in its articles of association
  • make decisions for the benefit of the company, not yourself
  • tell other shareholders if you might personally benefit from a transaction the company makes
  • keep company records and report changes to the Jersey Financial Services Commission
  • make sure the company’s accounts are a ‘true and fair view’ of the business’ finances

What are my legal responsibilities?

Most limited companies are ‘limited by shares’.

This means that the shareholders’ responsibilities for the company’s financial liabilities are limited to the value of shares that they own but haven’t paid for.

STANDARD BUSINESS PARTNERSHIP

In a business partnership, you and your business partner (or partners) personally share responsibility for your business.

You can share all your business’ profits between the partners. Each partner pays tax on their share of the profits.

What are my legal responsibilities?

as a business partner you are personally responsible for your share of:

  •  any losses your business makes
  •  bills for things you buy for your business, like stock or equipment

What at the partners’ responsibilities?

As a business partner you must:

  •  follow the partnership agreement (if you have a formal agreement). You should always ensure you have a partnership agreement to regulate how business decisions are made, how disputes are resolved and how to handle a buyout. You’ll be glad you have this agreement if for some reason you run into difficulties with one of the partners or if someone wants out of the arrangement.
  • endeavour to make the partnership a success, using your skills, experience and judgment
  •  make decisions for the benefit of the partnership

How Parslows can help

Parslows Jersey Business Legal Services team understand that each business is different and requires a unique approach. We tailor our legal services to suit your individual needs, providing you with exceptional results at all times

Our clients are pleased with our service and fees, we are confident you will too. In most cases we can offer fixed fees.

For further information please do not hesitate to email us at businesslaw@parslowsjersey.com or call 630530.

The information and opinion expressed in this briefing does not purport to be definitive or comprehensive and are not intended to provide professional advice. For specific advice, please contact Parslows, We are not responsible for, and do not accept any responsibility or liability in connection with, the content of this document or any reliance upon it.

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