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Home » News & Insights » Is a sole trader business the right business structure for you?

Is a sole trader business the right business structure for you?

Posted on 1st July 2020

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One of the questions we are most frequently asked by both current and especially by new clients relates to the most appropriate structure for their business. It’s rarely a topic that has a clear answer as there are advantages and disadvantages to a corporate structure and indeed, other alternatives. In this article we have discussed the most recognised ways to run a business and some of the advantages and disadvantages of the different structures, we begin with sole trader businesses.

Sole trader:

A sole trader is the simplest form of business structure available if you want to be self-employed. It’s an individual trading under their own name or a business name, and they are personally liable for all the business risks. At lower levels of activity, being a sole trader is a perfectly acceptable form in which to trade.

Advantages:

  • Simple to set up.
  • Low maintenance costs – no formal filing requirements apart from a tax return.

Disadvantages:

  • If your business becomes insolvent, creditors will be able to access your personal assets (including your home) to obtain payment of their debts.
  • In the same way, personal assets can be put at risk if third party claims cannot be met by insurance or business funds.
  • At higher levels of profitability, it will in most cases pay to incorporate your business to save tax.

If you are a new start up and need help with your tax returns, please contact us at MJB Avanti (08000) 388 799

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Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

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