Farm business structures

Sole trader is the simplest business structure, with one person responsible for the whole farm business.

There will be difficulties if the sole trader tries to share responsibilities, because all aspects of the farm are likely to be in the sole trader's name and ownership – such as bank accounts, bookkeeping and grant claims. The sole trader takes drawings from the business which appears after profit on the accounts. No agreements are necessary when operating as a sole trader as there is only one person with responsibility for the business.

A partnership is a simple business structure that allows more than one person to be responsible for the operations of the farm business.

Each partner can take drawings from the business which appear after profit on the accounts. All commitments are the responsibility of the partners directly. 

Agreements are highly recommended within a partnership, which set out:

• each person’s roles and responsibilities
• how the business would operate if a partner chose to leave

However, it is not uncommon for farms to not have agreements. 

If you have a farming system which is open to the public – such as food processing – you may consider a limited liability partnership.

A limited company is a complex business structure that allows one or more people to run a business.

Each person within the company is a director and would receive a director's salary which appears before profit on the accounts. An agreement is necessary to set out the roles and responsibilities between the directors. All commitments are the responsibility of the company rather than the directors of the company personally.

A trust is a complex business structure that is often used to protect assets.

A trust can be set up by trustees to enable them to pass on assets to a beneficiary. It allows the trustees to maintain an element of financial control while allowing the beneficiary to take over management control.  

Register a trust as a trustee – GOV.UK

Employing staff for the first time – GOV.UK 

Agricultural workers' rights: Overview – GOV.UK

Business changes and succession: talking things through 

Further help on choosing the right business structure: Get help and support for your business – GOV.UK