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IMD Corporate’s series aims to guide businesses and individuals through critical legal foundations. In the first episode, Adriana Balmus and Olexandr Kyrychenko discuss the importance of selecting the appropriate business structure for a new venture.

Listen and stay informed!

Business Structures Explored:

1. Sole Trader:
   • Description: A single owner operates the business as the same legal entity.
   • Benefits: Simple setup, full control, minimal regulations.
   • Risks: Unlimited personal liability; personal assets are at risk.
   • Tax: Income taxed as personal income.
2. Partnership:
   • Description: Owned by two or more individuals sharing responsibilities.
   • Benefits: Easy to set up, shared investment, and decision-making.
   • Risks: Unlimited liability shared among partners.
   • Tax: Profits taxed as personal income.
3. Limited Liability Partnership (LLP):
   • Description: A partnership with limited liability, creating a separate legal entity.
   • Benefits: Liability limited to investments; flexible structure.
   • Risks: Higher regulatory and reporting requirements.
   • Tax: Income taxed as personal income with additional reporting.
4. Private Limited Company (Ltd):
   • Description: A separate legal entity with ownership divided into shares.
   • Benefits: Limited liability for shareholders, easier capital raising, flexible governance.
   • Risks: Directors and controlling shareholders have fiduciary duties; higher compliance demands.
   • Tax: Pays corporate tax on profits; shareholders pay dividend tax.

Key Considerations for Selecting a Structure:

• Growth plans and scalability.
• Attractiveness to investors.
• Protection of personal assets.
• Tax efficiency and compliance requirements.
• Balancing simplicity with operational needs.

Conclusion: Choosing the right business structure is a critical decision impacting liability, taxation, growth, and compliance. While structures like sole traders and partnerships are simple to set up, limited companies offer better protection and investment potential. Consulting legal and tax professionals is recommended to align the structure with business objectives. The next episode will focus on essential legal documents for private limited companies.

This podcast is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this podcast was published.

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