Sole trader –
Definition: A sole trader is a company started and run by one individual
A sole trader - also known as a sole proprietorship or simply proprietorship - is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business.
Sole trading is widespread-
A very large proportion of business conducted in the UK is undertaken by the trader working on his own usually providing his own money (capital) to start the business.
The liability of any debts of the business will be down to him. In such a business there will probably be only one person doing this. He would normally deal with the day-to-day bookkeeping and then hand over the records to an accountant who will prepare the final end of year accounts and compute the tax due.
This means that the owner has unlimited liability. It is a "sole" proprietorship in the sense that the owner has no partners. A sole proprietor may do business with a trade name other than his or her legal name. This also allows the proprietor to open a business account with banking institutions.
Definition: A partnership is defined as two or more persons in business with a view to making profits; the number is usually limited to a maximum of 20.
In a partnership, the partners provide the capital and share the responsibility of running the business on agreement between its members.
Partnerships are common in the same services provided by sole traders but a partnership would have the advantage of being able to raise more money because each partner could make a financial contribution. The liability for any debts of the business would be the partners.
Tax advantage of partnerships
Partnerships are often favored over corporations for taxation purposes, as the partnership structure does not generally incur a tax on profits before it is distributed to the partners.
However, depending on the partnership structure and the jurisdiction in which it operates, owners of a partnership may be exposed to greater personal liability than they would as shareholders of a corporation.
Partnerships in economic In the economic Online Accounting system default account setups exist for various types of companies including Partnerships with and without VAT. Hereby the chart of accounts and other system features are automatically set up for you ready to be tailored to your needs. Private limited company’s
Definition: Limited companies exist in their own right, meaning that the company's finances are separate from the personal finances of their owners
A private limited company, although having no limit to the number of shareholders it can have, may only sell its shares privately and it is therefore restricted in the amount of capital it can raise. In contrast, the public limited company can invite the public to buy its shares and therefore has the greater potential to raise the most capital.
Shareholders of both private and public companies are part owners of their companies, Limited companies having the advantage of having restricted liability for the debts for the company.
Shareholders are not personally responsible for the company's debts, but directors may be asked to give personal guarantees of loans to the company.
Private or public limited companies-
•Private limited companies can have one or more members, eg shareholders. They cannot offer shares to the public. •Public limited companies (plcs) must have at least two shareholders and must have issued shares to the public to a value of at least £50,000 before it can trade.
Set-up of a Limited Company-
•Must be registered (incorporated) at Companies House.
•Must have at least one director (two if it's a plc) who may also be shareholders. Directors must be at least 16 years of age. At least one director must be a person. •Private companies are not obliged to appoint a company secretary but if one is appointed...
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