Sole traders Flashcards by Chantelle Johnson

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explain a sole trader and a sole traders tax liability

= a person carrying on business in their personal capacity.

ST pays income tax & CGT

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what are the advantages? (4)

No formation requirements so it is easier + less expensive to start
Minimal formalities (i.e. must inform HMRC of the business + pay tax)
No obligation to publicly disclose any information
Complete control over the business

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what are the disadvantages? (4)

No SLP so unlimited liability
The business cannot hold assets in its name because no SLP
ST also cannot take security out in the businesses’ name because no SLP
Less reputable status than other business mediums

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Sole traders Flashcards

(3 cards)