Starting a veterinary practice is an exciting venture, but there is a lot to consider. One of the most critical decisions you’ll face early on is selecting the right business structure. This decision will have long-term implications on how your practice operates, manages its finances, and addresses legal responsibilities. In this brief guide, we outline the key business structures available to vet practices and their advantages and disadvantages.
Private Limited Company
A private limited company (Ltd) is a separate legal entity and can be formed by one or more individuals. It is a popular choice for veterinary practices due to its liability protection and potential for future growth.
Advantages:
- Shareholders benefit from limited liability, protecting their personal assets.
- Potential to grow by issuing shares and paying dividends to shareholders.
- A limited company structure often conveys a more professional and credible image to clients and suppliers.
Disadvantages:
- Incorporation costs, alongside ongoing compliance and filing obligations with Companies House.
- Accounts and financial statements must be publicly accessible.
- More complex management and regulatory requirements compared to other structures.
Our company and commercial solicitors are very experienced in advising business owners on private limited company legal matters, and regularly help clients with incorporations, shareholders’ agreements, and restructuring companies.
Partnership
A partnership exists when two or more individuals operate in business together without forming a company or limited liability partnership (LLP). This structure automatically forms when the partners start trading.
Advantages:
- Shared responsibility for management and decision-making.
- Financial privacy, as partnership accounts are not publicly accessible.
Disadvantages:
- Each partner has personal liability for the debts and obligations of the partnership.
- Without a formal partnership agreement, there can be disputes about profit-sharing and management decisions.
- All business contracts are in the partnership’s name, and partners remain personally liable.
Our company and commercial solicitors are experts in partnership law, and can help you with preparing an appropriate partnership agreement.
Limited Liability Partnership (LLP)
An LLP offers some of the flexibility of a classic partnership, combined with some of the advantages of limited liability for its members. This structure is well-suited to veterinary practices with multiple owners, but they can be a bit confusing.
Advantages:
- Limited liability, meaning your personal assets are protected.
- Flexibility in how the business is managed and how profits are distributed among partners.
Disadvantages:
- Higher setup costs than a sole trader or traditional partnership.
- Public disclosure of accounts and financial statements, which might not appeal to some.
Our company and commercial solicitors have a lot of experience in drafting LLP Agreements, and can certainly help you should this be the model you choose for your veterinary practice.
Sole Trader
Not to be confused with “sole practitioner”, a professional operating in practice on their own, a sole trader is an individual who owns and runs the business personally. This structure is common for small businesses but is less typical for veterinary practices due to the scale and complexity involved in managing a veterinary clinic. Whilst this model is simple, there is significant risk from a liability point if view, and it may not always be the most tax efficient model either.
Advantages:
- Minimal setup costs.
- Simplified management with fewer formalities.
- Financial privacy—there’s no requirement to publicly disclose accounts.
Disadvantages:
- Personal liability for all business debts and obligations, meaning your personal assets are at risk.
- All contracts, including employee agreements, are in your name, increasing your personal exposure.
If you do choose to operate a veterinary practice as a sole trader, it is all the more important to seek sound legal advice when entering into contracts of all shapes and sizes as every one will place some form of liability and obligation on you as an individual. This is where our expert company and commercial solicitors can help.
Why Choosing the Right Structure Matters
The choice of business structure will affect every aspect of your veterinary practice, from day-to-day management and employment, to your personal exposure to financial risk. It also plays a significant role in how your practice grows and how profits are shared.
When setting up or restructuring a veterinary practice, it is essential to seek professional legal advice from an experienced solicitor. Commercial solicitors, such as the team at Scott Bailey LLP specialising in veterinary businesses can guide you through the complexities of business formation and ensure that your structure aligns with both your current needs and long-term goals.
How We Can Help
At Scott Bailey LLP, our solicitors understand the unique challenges veterinary professionals face when establishing or growing their practices. Our expert veterinary lawyers provide comprehensive legal services, helping you choose the optimal business structure, draft partnership or shareholder agreements, and ensure compliance with ongoing legal obligations. We are also highly experienced in advising vets on the sale and purchase of veterinary practices, and succession planning for veterinary practices. Click here for more on our legal advice for vets.
Contact us today to arrange a consultation and let us help you make informed decisions for the future success of your veterinary practice.
