Proprietorship :
A sole trader is the simplest, non-regulated form of trading where an individual acts solely on his own account .The main advantage is that the sole trader takes all the profit generated by the business but the disadvantage is that they are also personally liable for all the debts of the business.
individuals who are prepared to accept all the risks and rewards of the business
why do proprietorship firm get registered
Benefits
o The individual retains all profits made by the business and pays tax personally.
o Payment of Income tax only, rather than corporation tax
o Little legal administration
Additional Information
o The sole trader is fully responsible and therefore bears all financial risks
o A sole trader can easily incorporate a Limited Company to administer the business at any time in the future
o Raising investments or opening bank accounts in the name of the business can be more difficult for a sole trader
Income Tax
As a sole trader you will need to submit an annual self assessment form to the Inland Revenue and keep accurate and up-to-date records of all business transactions and accounts. You will also pay income tax and national insurance contributions on any profits. Losses can be offset against tax on other income.
The Inland Revenue will send you a Self Assessment tax and NI form to fill in.