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You should check that you understand the corporate structure of the business.听

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Legal entities听

It is important to understand the legal entity of the business. Legal entities may include:听听

• Sole traders/proprietors.听
• Partnerships.
• Limited companies.听

Sole traders/proprietors听

Sole traders are self-employed individuals who run their own business and work for themselves. Sole traders can keep all of their business鈥檚 profits after they鈥檝e paid tax on them. Additionally, sole traders are personally responsible for any losses their business makes. 听

Partnerships听

There are different types of partnerships including 鈥榦rdinary鈥� business partnerships, Limited Partnerships (LP) and Limited Liability Partnerships (LLP).听听

In an 鈥渙rdinary鈥� business partnership, two or more partners personally share responsibility for their business which includes:听

• Any losses their business makes.听
• Bills for items they buy for their business, like stock or equipment.听

The partners share the business鈥檚 profits, and each partner pays tax on their share. A partner does not have to be a natural person. For example, a limited company is classed as a 鈥榣egal person鈥� and can also be a partner. More information on legal and natural persons can be found on 188体育.听

In an LP, there will be at least one 鈥榞eneral partner鈥� and one 鈥榣imited partner鈥�. General and limited partners have different responsibilities and levels of liability for any debts the business can鈥檛 pay. You should note that all partners pay tax on their share of the profits.听

In an LLP, there will be two or more members. A member can be a natural person or a legal person such as a company, known as a 鈥榗orporate member鈥�.听Each member pays tax on their share of the profits but isn鈥檛 personally liable for any debts the business can鈥檛 pay.听

There are also different types of partnerships which can be set up under Scottish laws such as Scottish Limited Partnerships (SLP) and Private Fund Limited Partnerships (PFLP).听

Limited companies (LTDs)听

A limited company is a company 鈥榣imited by shares鈥� or 鈥榣imited by guarantee鈥�. The abbreviation LTD is used to denote a limited company.听

Limited by shares听

Limited by shares companies are usually businesses that make a profit. This means the company:听

• Is legally separate from the people who run it.听
• Has separate finances from personal finances.
• Has shares and shareholders.听
• Can keep any profits it makes after paying tax.听

Limited by guarantee听

Limited by guarantee companies are usually 鈥榥ot for profit鈥�. This means the company:听

• Is legally separate from the people who run it.听
• Has separate finances from personal finances.
• Has guarantors and a 鈥榞uaranteed amount鈥�.听
• Invests profits it makes back into the company.听

See also 听

Public limited companies (PLCs)听and private limited companies听听

You should be aware of the differences between PLCs and private limited companies. PLCs are listed on the stock market and may have many different owners. Additionally, more of their information is publicly available.听

The main difference between PLCs and private limited companies is that private limited companies cannot sell shares to the public. This can only be done by PLCs.听PLCs are usually larger companies than private limited companies, and they must have issued shares to a value of at least 拢50,000 before they can trade.听

Most limited companies are incorporated under the Companies Act. They are registered with Companies House and hold a certificate of incorporation.听All limited companies must publish annual accounts.听Additionally, shareholders may be natural persons or legal persons such as companies.听

Complex corporate structures听

Where a business is owned by another business, you should establish who the ultimate beneficial owner of a business is. You may need to work through the corporate structures to find an individual (natural person). You should also establish if the business has any subsidiaries or parent companies.听

Where a business operates as part of a group structure, you should take steps to understand how the group structure works. It may be that only some of the businesses in the group undertake relevant activity under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 depending on the nature of the business activities. See ECSH40545.