Starting a Business: Structure, Registration & Tax

The business structure you choose affects your taxes, liability, funding options, and how much paperwork you face every year. There’s no universal right answer — but there are clear tradeoffs.

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1. Business Structure Comparison

Structure	Liability	Tax	Best For
Sole Trader / Sole Proprietor	Unlimited personal	Personal income tax on profits	Freelancers, side projects, low risk
Partnership	Unlimited (general) / Limited (LP)	Pass-through to partners	Professional services, small teams
LLC (US) / LTD (UK)	Limited	Pass-through (LLC) or corporate (UK LTD)	Most small-medium businesses
S-Corporation (US)	Limited	Pass-through + payroll tax savings	US businesses > ~$40K profit
C-Corporation (US)	Limited	Corporate tax + dividends	VC-backed startups, IPO track
GmbH (Germany)	Limited	Corporate tax ~30%	German operations
SAS / SARL (France)	Limited	Corporate IS or IR option	French businesses

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2. How to Register: Country by Country

United States

Structure	How to Register	Cost	Timeline
Sole Proprietor	DBA filing with county/state (optional)	$0–$50	1–3 days
LLC	File Articles of Organization with state	$50–$500	1–4 weeks
Corporation (C-Corp)	File Articles of Incorporation	$100–$800	1–4 weeks
S-Corp election	File Form 2553 with IRS after incorporation	Free	2–4 months

United Kingdom

1. Register on Companies House (companies.gov.house.gov.uk) — £12 online, takes 24 hours
2. Register for Self Assessment (sole trader) or Corporation Tax (Ltd) with HMRC
3. Register for VAT if turnover exceeds £90,000/year (2024 threshold)

Germany

1. Trade registration (Gewerbeanmeldung) at local Ordnungsamt — ~€30
2. Tax registration with Finanzamt (within 4 weeks of starting)
3. For GmbH: notarial deed, commercial register entry (~€500–1,500)

France

1. Register via Guichet unique (formalites.entreprises.gouv.fr) — one-stop portal
2. Auto-entrepreneur (micro-enterprise): simplest, online in 24–48 hours
3. SAS/SARL: notarial deed or online at Infogreffe (~€300–600)

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3. Tax Obligations at Startup

Year 1 Essentials

Obligation	When	Notes
Register for income/corporate tax	At registration	Done automatically in most countries
Register for sales tax / VAT	At threshold	US: state-by-state; EU: country-by-country
Payroll tax / social contributions	On first paycheck	PAYE (UK), FICA (US), URSSAF (France)
Business bank account	Immediately	Keep strictly separate from personal
Bookkeeping	From day 1	Even simple spreadsheets help

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4. Common Licenses and Permits

Not every business needs special licenses, but many do. Check before you open.

Business Type	Typical License / Permit
Food service / restaurant	Food handler’s permit, health inspection
Retail (alcohol)	State/national alcohol license
Professional services (legal, medical)	Professional board license
Financial services	FCA (UK), SEC/FINRA (US), BaFin (Germany)
Online retail (EU)	Consumer terms of service, GDPR compliance
Daycare / childcare	Local authority / state registration

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5. Startup Cost Estimates

Item	US LLC	UK Ltd	French SAS	German GmbH
Registration fee	$50–500	£12	~€300	~€500–1,500
Notary (if required)	No	No	Optional	Required
Registered agent	$50–300/yr	No	No	No
Accountant (year 1)	$500–3,000	£500–2,000	€1,000–3,000	€1,500–4,000
Business bank account	$0–25/mo	£5–25/mo	€0–30/mo	€5–30/mo

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6. One-Person Business: Sole Trader vs LLC

For solopreneurs, the choice usually comes down to liability vs simplicity.

Factor	Sole Trader	LLC/Ltd
Setup	Instant, nearly free	Few days, small fee
Tax filing	Schedule C (US) / Self Assessment (UK)	Separate corporate return
Liability	Your personal assets at risk	Limited to business assets
Perception	Less professional	More credible with clients
Recommended when	Low-risk consulting, testing an idea	Any ongoing business