An interview of a sole trader project need and importance
Answers
A SOLE trader is normally a good choice when just starting out on your own. A sole trader is usually a person who sets up their own business. They can work alone or employ staff. Tradesmen, It consultants and building contractors may choose this business structure. One important factor that affects Sole Traders is that they will have unlimited Liability. This means that the business owner will have unlimited liability for any losses or debts that the business may incur. However on the other hand, all profits subject to tax of course will belong to the owner. Sole Traders can use a Company Name like any other business. Generally, a sole trader will need little capital to start their business depending on what equipment is needed. Tradesmen, cleaners, IT specialists, builders and consultants are typical professions that would suit a sole trader company structure.
As a Sole trader you are not required by UK law produce annual accounts for inspection. Many new businesses often start off as a sole trader because is quite cheap, simple and quick to set up. Your tax can be self assessed allowing expenses to be tax deductable which is often a major attraction. Travel expenses, working from home costs and business materials can all be deducted from your income. Only the profit that the business makes is taxed. Many sole traders choose to employ an accountant to help with their end of year accounts and the submission of their tax returns or self assessment. All expenses should be recorded and all receipts kept. Once these are deducted from your total earnings, the profit left is what will be taxed.
Operating as Sole trader actually offers a lot of flexibility as you are the business owner. Any profits that the business makes are entirely YOURS.
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