Business Flashcards
1
Q
Key characteristics of sole traders
A
- No set up costs - can trade straight away
- Unlimited personal liability
- No formal structure
- No companies house filing or procedural requirements
- Complete privacy - no need for publicly filed accounts
- Personal capital injection of cash.
- Contracts formed between individuals and third parties
2
Q
Partnerships key characteristics
A
- No set up costs or formalities.
- Unlimited joint and several (tort) liability for debts and obligations.
- Not a separate legal entity
- No companies house filing
- Complete privacy
- Contracts formed between 3rd parties and the partners in the partnership as individuals.
3
Q
Limited liability partnerships - key characteristics
A
- Costs involved in incorporation including legal fees.
- Partners have limited liability - their liability to third parties is limited to the amount that they have agreed to pay under the terms of their partnership agreement.
- Separate legal personality
- Flexible structure decided in written Member’s Agreement
- Registered at companies house
- Must file annual accounts and other info
- LLP can borrow in its own name. It can also create floating charges.
4
Q
Companies - key characteristics
A
- Costs involved in incorporation including legal fees.
- Liability of the SH is limited to the amount unpaid on their shares (if any)
- Separate legal entity
- Must be registered at companies house
- Various filings and disclosures made at CH
- Can borrow in the name of the company / can issue shares for money.
5
Q
How do sole traders pay tax?
A
They are taxed on their income and on any one-off transactions (Capital gains tax)
6
Q
How do partnerships pay tax?
A
Taxes paid on income of partners and any one-off transactions (Capital gains tax)
7
Q
How do LLPs pay tax?
A
Partners are tax as individuals and taxed on their share of the LLP’s profits and gains
8
Q
How do companies pay tax?
A
Tax paid on taxable total profits. Shareholders will also pay taxes on dividend income.
