Corporate

When you are setting up in business, many important decisions need to be made but perhaps the most important is what type of business structure you should go for.

Some people will want the flexibility which comes with being a sole trader. A sole trader operates on his or her own, without the need for any further formalities.

However, that flexibility can bring disadvantages. If you experience problems, it is you and you alone who are accountable to creditors and customers. It may be difficult to get access to bank financing without providing personal guarantees. In the worst case scenario, if things go wrong and your business becomes insolvent, it would be your house on the line.

If there are two or more of you, you may decide to set up in partnership. This has the advantage of sharing your resources and strengths. If you decide to go down the partnership route, we recommend that you spend time at the outset having a partnership agreement drawn up.

Partnership Agreement

A partnership agreement should cover all issues which might come up during the life of the partnership – how profits are split, who owns the capital, who can buy in and on what terms, in what circumstances the partnership will come to an end and so on. Having a clear agreement from the outset can be extremely helpful in avoiding disputes further down the line, if the partners fall out or simply grow apart.

In a partnership arrangement, you and your partners are personally accountable to your creditors and customers who can pursue you personally for payment. Again, it is your house which is on the line, if things go badly wrong.

Companies

For that reason, one of the most popular structures for new start businesses is the company. Guernsey updated its companies legislation in 2008 and the new legislation offers a very effective, modern Company Law.

The Companies Law (Guernsey) Law 2008 came into force on I July 2010 and sets out the minimum formalities which you need to comply with when setting up your company, running it and when bringing it to an end. For example, there are requirements for annual filings with Guernsey’s Companies Registry which need to be complied with.

You can also find information on corporate and commercial issues on the topic sponsors website. There is also more information on the following websites: Guernsey Registry, Guernsey Legal Resources and the Guernsey Financial Services Commission, all of which have information on corporate matters in Guernsey.