DIFFERENT TYPES OF BUSINESS ENTITY

Question 1

Business Types

Answer 1

Sole Trader - Owned and operated by 1 person

Partnership- Owned and operated by 2 or more

Company- Owned by shareholders, operated by directors

Question 2

Sole Trader - Employees? Liable?

Answer 2

Might have any number of employees
Personally liable for losses

Question 3

Partnership Losses

Answer 3

Each partner jointly and severally liable for losses

Question 4

Companies liability

Answer 4

Usually limited

Means shareholders not liable for losses

Company is separate legal entity from shareholders

Question 5

Companies Act 2006

Answer 5

Shows duties of directors to company

Question 6

Taxes and entity

Answer 6

Sole Trader - NIC,Income Tax, VAT

Partnership - NIC, VAT

Company - Corporation tax, NIC, VAT

Question 7

Sources of finance

Answer 7

Sole Trader, partnership- Capital invested
Company - Shares

Question 8

Liability for business type

Answer 8

Sole Trader, partnership - Unlimited

Company - Limited

Question 9

Distribution of profit

Answer 9

Sole Trader, partnership - drawings

Company Dividends

Question 10

Does sole Trader have formal obligation to submit accounts?

Answer 10

No but must pay income taxes, so should maintain records of business income and expenses

Question 11

How long sole Trader keep records?

Answer 11

5 years past deadline for tax return

Question 12

Which statutory registers must a company keep?

Answer 12

1) Members
2) Directors and company secretary
3) Charges (mortgages and security on loans)
4) Person with significant control (over 25% of shares)

Question 13

Where should company registers be kept?

Answer 13

Company’s registered office, and ready for public inspection

Question 14

Who is Confirmation Statement required by, how frequently?

Answer 14

Required by company
Can be sent anytime, but no more than 12 months can pass between each.

Question 15

What does confirmation statement confirm?

Answer 15

Changes to key information, or that there are none.

Question 16

Changes confirmation statement shows?

Answer 16

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

Question 17

What must accounting records show?

Answer 17

1) Details of all money received and spent
2) Record of assets and liabilities
3) Statement of stocks at end of year

Question 18

For how long must accounting records be kept?

Answer 18

6 years

Question 19

Annual Accounts required of companies

Answer 19

1) Balance Sheet and profit and loss account (statement of fp)

2) Directors report showing amount of any dividend and likely future developments

Question 20

Must annual financial statements be signed and approved?

Answer 20

Yes, on behalf of board of directors and a copy filed at companies house

Question 21

Can file accounts with companies house and corporation tax return using HMRC online service?

Answer 21

Yes

Question 22

What % of shares must company A own of comp. B to have ownership?

Answer 22

> 50%

Question 23

If A owns B

Answer 23

A LTD would prepare own accounts for A Ltd

Add together consolidated accounts for A and B

Question 24

Partnership act 1980 will apply when

Answer 24

There’s no partnership agreement