DIFFERENT TYPES OF BUSINESS ENTITY Flashcards
Business Types
Sole Trader - Owned and operated by 1 person
Partnership- Owned and operated by 2 or more
Company- Owned by shareholders, operated by directors
Sole Trader - Employees? Liable?
Might have any number of employees
Personally liable for losses
Partnership Losses
Each partner jointly and severally liable for losses
Companies liability
Usually limited
Means shareholders not liable for losses
Company is separate legal entity from shareholders
Companies Act 2006
Shows duties of directors to company
Taxes and entity
Sole Trader - NIC,Income Tax, VAT
Partnership - NIC, VAT
Company - Corporation tax, NIC, VAT
Sources of finance
Sole Trader, partnership- Capital invested
Company - Shares
Liability for business type
Sole Trader, partnership - Unlimited
Company - Limited
Distribution of profit
Sole Trader, partnership - drawings
Company Dividends
Does sole Trader have formal obligation to submit accounts?
No but must pay income taxes, so should maintain records of business income and expenses
How long sole Trader keep records?
5 years past deadline for tax return
Which statutory registers must a company keep?
1) Members
2) Directors and company secretary
3) Charges (mortgages and security on loans)
4) Person with significant control (over 25% of shares)
Where should company registers be kept?
Company’s registered office, and ready for public inspection
Who is Confirmation Statement required by, how frequently?
Required by company
Can be sent anytime, but no more than 12 months can pass between each.
What does confirmation statement confirm?
Changes to key information, or that there are none.
Changes confirmation statement shows?
1) Address of registered office
2) Type of company
3) Principle business activities
4) Details of officers (directors)
5) Details of issued shares and their holders
6) Paticulars of those who have ceased to be members since last return
What must accounting records show?
1) Details of all money received and spent
2) Record of assets and liabilities
3) Statement of stocks at end of year
For how long must accounting records be kept?
6 years
Annual Accounts required of companies
1) Balance Sheet and profit and loss account (statement of fp)
2) Directors report showing amount of any dividend and likely future developments
Must annual financial statements be signed and approved?
Yes, on behalf of board of directors and a copy filed at companies house
Can file accounts with companies house and corporation tax return using HMRC online service?
Yes
What % of shares must company A own of comp. B to have ownership?
> 50%
If A owns B
A LTD would prepare own accounts for A Ltd
Add together consolidated accounts for A and B
Partnership act 1980 will apply when
There’s no partnership agreement
