Download PDF by Alexis Mavrikakis; College of Law (England and Wales); et al: Business law and practice. [2011/2012]

By Alexis Mavrikakis; College of Law (England and Wales); et al

ISBN-10: 1907624899

ISBN-13: 9781907624896

ISBN-10: 1908604131

ISBN-13: 9781908604132

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Extra resources for Business law and practice. [2011/2012]

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A sole trader earns his income from the money received from his customers or clients, and keeps all the profit himself. He pays income tax as a self-employed person. See Chapter 24 for further information on the taxation of sole traders. In law a sole trader is personally liable for all the debts of the business. The business has no legal status of its own. This means that the sole trader’s business assets and personal assets are treated as one and the same. If the business (eg, a florists) fails, it is not just the sole trader’s business assets (such as the shop, flowers and delivery van) but also the sole trader’s personal possessions, including any savings, house and car, which may be taken or sold to repay outstanding debts.

Companies are not subject to income tax as are sole traders and partners, but to a different tax specific to companies – corporation tax. It is ultimately the owners of the company, the members, who get to share in the profits made by the company. Companies must register with HMRC for corporation tax purposes once they have been formed, and usually also as an employer for PAYE and National Insurance purposes. See Chapters 21 to 29 for further information on the taxation of companies. There are a number of different types of company which may be formed, and we consider them in turn below.

Nevertheless, private limited companies are just as likely to run much smaller-scale family-owned or High Street businesses. The CA 2006 defines a private company in s 4(1) as ‘any company that is not a public company’. 3 below). In summary, though, a private limited company can raise money for its purposes only from a restricted circle of owner-investors. This is because, under s 755 of the CA 2006, it is prohibited for a private company to raise money from members of the public at large by issuing securities such as shares.

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Business law and practice. [2011/2012] by Alexis Mavrikakis; College of Law (England and Wales); et al


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