When starting your hairdressing business, one of the most important decisions you’ll make is choosing the right business structure. The structure you choose will affect your taxes, legal responsibilities, and how you manage your finances. Below, we explore the most common business structures for hairdressers and what each one entails.

1. 1. Sole Trader

      As a sole trader, you are the sole owner of your hairdressing business. This is the simplest business structure, ideal for many self-employed hairdressers. You are responsible for all aspects of the business, including the profits, losses, and any debts incurred.

      Advantages:

      • Easy and inexpensive to set up
      • Full control over your business
      • Fewer regulations and paperwork

      
      Disadvantages:

      • You are personally liable for any debts or legal issues
      • It may be harder to secure funding or expand the business

   2. Limited Company

      A limited company is a separate legal entity from you as the business owner. This means your personal assets are protected, and you’re only liable for the business’s debts up to the amount you’ve invested in the company. Limited companies are often preferred for more established businesses or if you want to expand.

      Advantages:

      • Limited liability protects your personal assets
      • Tax efficiency, as profits are taxed at the corporate tax rate
      • Easier to raise funds or secure loans

      Disadvantages:

      • More paperwork and administration
      • Higher setup costs
      • Required to file annual accounts and returns

   3. Partnership

      If you plan to run your hairdressing business with one or more partners, you can set up a partnership. In this structure, you and your partners share the business’s profits, losses, and liabilities. Partnerships can work well if you want to combine skills or resources with another person.

      Advantages:

      • Shared responsibilities and resources
      • Easy to set up
      • Flexible profit-sharing arrangements

      
      Disadvantages:

      • Each partner is personally liable for the business’s debts
      • Conflicts between partners can arise, which may affect the business

   4. Limited Liability Partnership (LLP)

      A Limited Liability Partnership (LLP) combines elements of both a partnership and a limited company. While the business is run by the partners, each partner's liability is limited, protecting personal assets.

      Advantages:

      • • Limited liability protection for partners
        • More flexible than a limited company
        • No need to pay corporation tax on profits

      Disadvantages:

      • • More complex to set up than a simple partnership
        • More paperwork than a sole trader setup

Things to Consider When Choosing a Structure

When deciding on the right structure for your business, you should consider factors like your business size, future goals, and the level of risk you’re willing to take. For example, if you’re just starting out and want to keep things simple, becoming a sole trader might be the best option. However, if you plan to grow and expand, forming a limited company could offer you more protection and opportunities.

Choosing the right business structure for your hairdressing business is crucial for long-term success. Take the time to assess your goals, the level of risk involved, and how much responsibility you’re ready to take on. If you’re unsure, it’s always a good idea to seek advice from an accountant or business advisor to ensure you’re making the best decision for your future.