You get all profit made, as you don't need to share it out among partners. You are on your own if something goes wrong e.g. Business goes into debt. You get to make all decisions as you don't need to consult partners. You might make a bad decision because nobody could deflect it. Easy to set up, with little paperwork or red tape. It can be hard to raise capital to start-up or expand business. You can work in an area that interests you. May have long work hours and risk losing money if go on holiday. Legal Process of setting up this business: As a sole trader, you will not need to notify Companies House, nor deal with any administrative or accounting requirements which are required of limited companies.
If you start working for yourself, you must register with HMRC as self-employed, even if you already send in a tax return. There are some exceptions for particular industries, like the construction industry. You should register the moment you start out as a sole trader; otherwise you could incur a financial penalty. 1b) Laws and regulations affecting my business: Health & Safety at Work: This describes the rights and responsibilities of employees and employers with regard to safety in the work place. EXAMPLE: John split his coffee on the floor and said it was responsibility of the cleaner to clean it up. Working Hours Act: Stipulates the maximum number of hours a week a worker can be asked to work.
EXAMPLE: Sarah has just signed a contract of employment and there was a clause which said she had agreed to opt out of working more hours. This clause is on all contracts. Type Of Record Description of business record Regulations and laws for keeping this record Reasons/importance of keeping this record Tax returns Details income and expenses so the right amount of tax can be taken from their profit. By law this must be sent to the HMRC once a year. So the right amount of income tax can be given to the government from the businesses profit.
VAT returns Businesses earning over about 60,000 turnover must be VAT registered and pay tax on most sales transactions. Businesses which are VAT registered must send a VAT return to the HMRC usually every quarter. To ensure the proper amount of VAT is being paid by the business. Health and safety Businesses with premises must inform their local authority or Health and safety executive (HSE) that they exist, if 5 or more people are employed then a health and safety risk assessment must be taken out. This is related to the health and safety at work act. By law if a business employs a certain amount of employees must have a risk assessment.
So that the risks of the business are properly assessed and all necessary governmental authorities are informed. Leasing arrangements A contract detailing the arrangement of a leasing contract. By law when a contract has been written the business must pay fixed monthly sums. So that the business know how much they are paying to lease and cannot be conned and to ensure on time payments by the business in question.
Minutes from a board of directors meeting An overview of the main points mentioned in a board of directors meeting. By law minutes from these meetings must be made available to the public. So everyone can see what has been said in the board of directors meeting and know the direction said business is going in. Employees Personal file on all employees. Employment Act For paying salaries/emergency contact numbers.