Jargon Busters: Artists and Makers Business Types
Jargon Buster for Artists' Business Types
The Three Types of Business in the UK
Artist and Makers Business Jargon Busters is a short introduction to the main types of businesses run by artists and makers in the UK. For more detail see
Sole trader (Self-employed)
If you’re an individual, and run your own business, you can register as a sole trader. This means you can keep all your business’ profits after you’ve paid tax on them. You’re personally responsible for any losses your business makes.
HMRC offers a calculator to help you budget for your tax payments as a sole trader. They also provide a how to set up as a sole trader info sheet.
A limited company
Limited companies often operate under a trading name which is usually the name of the business.
A limited company can be classified as limited by shares or limited by guarantee.
A limited by shares company usually operates for the purposes of turning a profit, has shares and shareholders and can keep any profits it generates after paying tax.
NOTE: You can be the only shareholder!
A limited by guarantee company has guarantors rather than shareholders and invests profits back into the company. These organisations are commonly known as ‘not for profit’. NOTE: Community Interest Companies are also seen as ‘not for profit’ companies.
HMRC guidance on how to set up a limited company provides you with a step-by -step guide online of how to do this.
Community Interest Companies (CICs)
A CIC is a special type of limited company which exists to benefit the community rather than private shareholders.
To set up a CIC, you’ll need:
- a ‘community interest statement’, explaining what your business plans to do
- an ‘asset lock’- a legal promise states that the company’s assets will only be used for its social objectives, and setting limits to the money it can pay to shareholders
- a constitution – you can use the CIC regulator’s model constitutions
- to get your company approved by the community interest company regulator.Note: your application is automatically be sent to them
The CIC regulator has guidance on setting up a CIC. This is the more complex form of business registration noted so far. However, it may work for you if you are a collective focussed on benefiting a particular group of people or a community.
This is the overview – find more detail in the ArtMakers information sheets noted above.
If you want more detailed information on all these topics and examples of worksheets on running a marketing campaign etc and templates as to help with business plans etc please register with Artmakers.
Photo by Ritesh Arya