1.1 Explain the differences between the:
A. Private Sector
Sole Traders – This organisation type mainly relies on the business being owned by one individual. They handle all the financial risk in regards to operating the business for a return of profits. They have the responsibility of dealing with any losses the business makes and bills representing things that have been bought for the business. The normal things would be stock or equipment. Records will be kept for all sales and spending the business has done.
A sole trader will need to be registered with HMRC (HM Revenue and Customs) as soon as possible after a business has been started. They will also need to send self-assessment tax returns annually, pay any incoming tax on profits and national insurance, and have a registration set up for VAT if the business’s takings are more than threshold’s that are set each year. Examples of sole traders are window cleaners & painters. Partnership – This relies on two or more people owning the …show more content…
They will be in charge of maintaining business records and handling returns in regards to tax. Nominated partners have to register partnership with HMRC. After they complete this, they register automatically for any self-assessment that would need to be done. Partners of other kind have to register for self-assessment, which should lead to them being able to pay for any personal tax and national insurance. This can only happen from these other partners’ share of profit from the partnership. Nominated partners will need to send partnership self-assessment tax returns each year and every partner will need to send personal self-assessment tax returns each year. They will be reliant on paying income tax of any shares of profits from the partnerships, on top of national insurance payments. A partnership will be expected to have a registration setup for VAT if takings happen to go beyond
A. Private Sector
Sole Traders – This organisation type mainly relies on the business being owned by one individual. They handle all the financial risk in regards to operating the business for a return of profits. They have the responsibility of dealing with any losses the business makes and bills representing things that have been bought for the business. The normal things would be stock or equipment. Records will be kept for all sales and spending the business has done.
A sole trader will need to be registered with HMRC (HM Revenue and Customs) as soon as possible after a business has been started. They will also need to send self-assessment tax returns annually, pay any incoming tax on profits and national insurance, and have a registration set up for VAT if the business’s takings are more than threshold’s that are set each year. Examples of sole traders are window cleaners & painters. Partnership – This relies on two or more people owning the …show more content…
They will be in charge of maintaining business records and handling returns in regards to tax. Nominated partners have to register partnership with HMRC. After they complete this, they register automatically for any self-assessment that would need to be done. Partners of other kind have to register for self-assessment, which should lead to them being able to pay for any personal tax and national insurance. This can only happen from these other partners’ share of profit from the partnership. Nominated partners will need to send partnership self-assessment tax returns each year and every partner will need to send personal self-assessment tax returns each year. They will be reliant on paying income tax of any shares of profits from the partnerships, on top of national insurance payments. A partnership will be expected to have a registration setup for VAT if takings happen to go beyond