How should you structure your care business?

Working out which model to use for your care business is a really important decision and one that you should probably take advice on from a professional, such as an accountant or solicitor.If you have decided that you want the freedom of being your own boss, then you have a few options for setting up your company:

• Being self-employed
• Setting up a limited company
• Forming some sort of partnership

Self-employed (Sole Trader)

[ADS]Working for yourself and being your own boss does hold appeal for many people. If you're self-employed then you decide what you do and when you do it. Obviously, you have to meet your clients' needs or else you won't have any clients, but you have a lot more control.In return, you take a lot more of the risk and the responsibility. You are responsible for paying your taxes, National Insurance, getting insurance, making sure you are trained appropriately and providing the forms, policies and procedures. As you're taking much more of the risk, it would be normal to assume that you can charge a higher hourly rate.As someone who is self-employed, you will manage your tax through your annual Self-Assessment, and National Insurance will be paid either monthly or six-monthly.The decision to go down the self-employment route is not entirely up to you, however. HMRC may well decide that you are not self-employed if you only have one client for who you provide services, and instead treat you as an employee of that client. As a rule of thumb, you should only consider the self-employed option if you intend to have several clients at a time. Find out more about whether you are considered employed or self-employed here.As a self-employed sole trader, with no responsibility for supplying a substitute at any time (ie if you are on holiday, off sick, etc), you are currently not required to register with the Care Quality Commission.

Limited Company Care Business

For some, who have plans to scale up their business, setting up a limited company will be the logical choice. You still have the choice and control that you do when self-employed and you still take on the risks and responsibilities. A limited company becomes an entity in its own right - that means that it can hold contracts, take out insurance and employ staff, rather than you personally doing it. It basically means that the liability is limited, the company takes the risks and you keep your own finances and assets separate from those of the company.This may sound like a great option and it is for many organisations, but there are some drawbacks. You will need to register and file accounts with Companies House - to do this it is likely you will need to hire an accountant. If you're planning on providing personal care, then you will need to register with the Care Quality Commission (CQC) which, in September 2020, if you have 10 service users costs from £782 per annum. As you reduce the risks to yourself personally and can get paid in a more tax-efficient manner, a limited company makes sense financially for larger organisations but not always for smaller ones. If you're planning on growing and taking on staff in the future, then it could be a good option, but this is definitely something that you should take professional advice on.If you want to work for one service user, but do not want to be their employee, then forming a limited company may be a good option.

Community Interest Company Care Business

A community interest company is a limited company (and so all of the information above still applies, however it is specifically designed for people who want to benefit the community through their business.  This means that you have a Community Interest Statement' which shows how the companies activities will benefit the community.  There is also an asset lock which means that the company's assets can only be used to benefit the community (this includes limits the money that can be paid to shareholders).  All Community Interest Companies need to be approved by the Community Interest Company Regulator.If you are setting up a service to benefit the community and want to give back to the community as your business grows then this might be a good option.  You may be able to access some funding from grant-making trusts to help you get started or to develop your business, depending on how you structure your CIC.   You will need to remember that you won't be able to just 'sell' the business in the future as there will be conditions over who and how it can be transferred under the asset lock.

Partnership Care Business

It may be that you have a group of people who wish to work together to provide care and support. You could set up a partnership, which is similar to being a Sole Trader in that all partners are personally liable and all partners pay tax through Self Assessment.You could also choose to set up a limited company together, which has all the pros and cons detailed above. Alternatively, in 2001 Limited Liability Partnerships (LLPs) were introduced, which offer a cross between a partnership and a company structure. An LLP means that the partners have, as the name would suggest, limited liability. Like a limited company, an LLP can take on contracts, staff, etc, but the way you are taxed is different - each partner is assessed on their share of the LLP's income.  With an LLP, you would still be required to register with CQC if you are providing a regulated activity (ie personal care).As with a limited company and CIC, if you are considering setting up an LLP, then you should take specialist advice, and for any form of partnership, the wording of the formal partnership agreement needs careful attention and legal advice.