One of the first decisions to be made by anyone moving into independent production is what sort of business structure to operate under. The tendency is to want to set up a company, not least because this shows you are a serious player. A company is a more costly structure than some of the alternatives and, while it may offer many advantages, there may be reasons to consider other options in the early stages. The choice of business structure needs to be an informed decision that is made after weighing up the pros and cons (see Table 26.1), not a decision made on a whim, or for reasons of self-image.

Sole trader is a simple low-cost structure. While it does not provide personal protection from liability for the business operation, there may be advantages in being taxed at personal income rates rather than company tax rates in the early stages of operation, where set-up costs outweigh returns. On the other hand, the bigger the operation becomes, the more unwieldy it is as a sole trader and the more personally exposed the individual becomes to its trading liabilities. A partnership involves similar cost and tax considerations, but has the advantage of pooling resources and skills. A private company may be a more practical approach as the operation gets bigger, even though it brings responsibilities with it as the courts keep closer scrutiny on company principals and their corporate duties.