BusinessThe most important decision you will make when starting a business is choosing a legal structure. Sole proprietorship, partnership or LLC, which will work best for your interests? Your choice has legal and financial implications; needless to say, you have to consider your options carefully.

Legal practitioners, such as those from, empathise with start-ups and their concerns, advocating right information for an informed decision. Refer to this guide and see which will fit your needs best.

Sole Proprietorship

In this legal structure, the law sees you and the business as the same legal entity. This means you assume full control of the trade. You operate under your own name or the business name, without setting up a formal legal entity, like a partnership, trust or company. When registering the business, you simply have to use your personal IRD number.

While you are in full control of everything, including all the profits, you are also completely responsible for the taxes, liabilities and debts your business will incur. You may also encounter problems in dividing income with other people involved in the business.

Sole proprietorship is an ideal option if your business is operated by just one person, where income-splitting wouldn’t be an issue.


This legal structure involves two or more people or entities sharing assets, profits and liabilities in the business. Each member of the team often contributes different skills and resources, on top of the individual roles and responsibilities written in the partnership agreement. This kind of set-up allows for division of income in fixed proportions.

Your income is still taxable from the partnership, though. And while you are liable for your own debts, you are also responsible for the business debts your partners incur if they go broke.

This type of legal structure is best for professionals doing the same practices (like legal or medical practitioners) because you can split income without too many formalities.

Limited Liability Company

In this set-up, the organisation exists as a formal, legal, independent entity. It is separate from its shareholders or owners. This is by far the most popular form of business structure, because it promotes confidence in businesses, regulating the relationships between investors, directors and creditors more effectively.

One thing you must watch out for here is the costs and formalities of establishing and operating the company. Be familiar with the legal requirements to avoid issues.

Your business structure choice is the first crucial step towards success, so make sure you choose wisely. Seek advice from legal practitioners.