Business structures: sole trader, LLC and limited company, as the SBA, IRS and GOV.UK describe them
A tree business in the United States or the United Kingdom is set up as a sole proprietor or sole trader, a partnership, an LLC, a corporation or a limited company. This page reports how the official pages describe each.
Checked against the sources at the bottom of this page on October 9, 2026. Rules, fees and pay change: the source has the last word.
This page reports what the official source says. It is not legal advice: ask the office named here. It covers the United States, from the Small Business Administration (SBA) and the Internal Revenue Service (IRS), and the United Kingdom, from GOV.UK. All pages were read on October 9, 2026. Canada and Ireland are on their own page, Australia is on another, and New Zealand is not covered on these pages. The page says nothing about which structure suits any tree business.
United States: the SBA list
The SBA says the structure a business picks affects how much it pays in taxes, its ability to raise money, the paperwork it files and its personal liability, and that a structure must be chosen before registering with the state. It also says a business can convert later, but restrictions may apply by location, and a conversion could bring tax consequences. The IRS page says the form of business decides which income tax return form is filed, and names the sole proprietorship, partnership, corporation and S corporation as the most common forms. It describes a limited liability company (LLC) as a structure allowed by state statute.
| Structure | What the SBA says about it |
|---|---|
| Sole proprietorship | Easy to form; you are automatically one if you do business activities and do not register as another kind. It is not a separate entity, so business and personal assets and liabilities are not separate, and the owner can be held personally liable for business debts |
| Partnership | The simplest structure for two or more owners. Limited partnerships have one general partner with unlimited liability; in a limited liability partnership every owner has limited liability. Profits pass through to personal tax returns |
| Limited liability company | Mixes features of corporations and partnerships. It says personal assets such as a vehicle, house and savings are not at risk if the LLC faces bankruptcy or lawsuits "in most instances". Profits and losses pass through to personal income, and members are considered self-employed and pay self-employment tax |
| C corporation | A legal entity separate from its owners, with the strongest protection from personal liability but a higher cost to form and more record keeping. It pays income tax on profits, and profits can be taxed again when dividends are paid |
| S corporation | A special type of corporation meant to avoid that double taxation, with profits and some losses passed to owners. It must file with the IRS for the status, and some states do not recognize the election |
The SBA also lists benefit corporations, close corporations, nonprofit corporations and cooperatives, and notes that labels such as S corporation are also a tax status: an LLC can be taxed as a corporation. For tax questions the IRS page points readers to the SBA page and its own pages for each form.
United Kingdom: sole trader or limited company
GOV.UK opens its guide by saying most businesses register as a sole trader or a limited company, that the structure affects the way tax is paid and legal responsibilities, and that a business can move from one structure to another, usually more easily from sole trader to limited company. It sets the two side by side.
| Topic | Sole trader | Limited company |
|---|---|---|
| Liability | Personally responsible for all of the debts of the business, called unlimited liability | Owners responsible for the debts only up to the value of their financial investment, called limited liability |
| Registering | Can start trading without registering, but must register for Self Assessment if earning more than GBP 1,000 in a tax year (6 April to 5 April) | Must register the company before trading |
| Tax on profits | Income Tax and possibly National Insurance through Self Assessment; no Corporation Tax | The company pays Corporation Tax on profits; directors may owe Income Tax and National Insurance depending on how they take money out |
| Accounts | Must keep records to work out profit or loss | Directors keep company and accounting records, file accounts and tax returns for the company, and check a confirmation statement with Companies House |
| VAT | Registers if it meets the requirements | The company registers if it meets the requirements |
| Staff | Can have employees | The company can have employees |
GOV.UK lists other ways to set up: a business partnership, a social enterprise, an overseas company and an unincorporated association. Both of its step guides say the owner may need business insurance and, depending on the work, licences or permits. The sole trader guide says an owner can use their own name or a trading name.
For the registration side of each country, see registering as self-employed or a sole trader. For insurance, see what tree work insurance covers.
Sources
- U.S. Small Business Administration, choose a business structure, read October 9, 2026
- Internal Revenue Service, business structures, last reviewed October 3, 2026, read October 9, 2026
- GOV.UK, set up a business: sole trader or limited company, read October 9, 2026
- GOV.UK, set up as a sole trader, read October 9, 2026
- GOV.UK, set up a limited company, read October 9, 2026