Module 2 - part 1

What is a sole trader?

Who are contracts with?

a single person acting self-employed

the person is the business

What NI do sole traders pay?

• Class 2 - voluntary - if profits are under the threshold

• Class 4 - compulsory - if profits above the threshold

Who is involved in a partnership, and how does tax/NI work?

• 2 or more people working together

• each partner is treated as self-employed and responsible for their own tax returns and NI

How is the legal identity of a partnership?

the partners

Who is liable for the debts of a partnership?

the partners - since they are treated as self-employed

Who is the legal person of an LLP?

The LLP is the legal person and legal identity of a contract

Who is liable for debts of an LLP?

The business

How are the partner’s treated in an LLP?

as self-employed, but the LLP is the legal person

Who is the legal person of a Ltd?

the business itself - directors are classed as employees

What tax does a Ltd pay?

Corporation tax - does not pay CGT

Who is liable for Ltd company debts?

the company itself

although some lenders may require directors to act as guarantors.

What is a PLC?

a larger version of a Ltd that is publicly owned, and usually floated on a stock exchange

For a PLC - what minimum directors and shareholders must it have?

What about capital from shares?

Minimum of 2 directors

Minimum of 2 shareholder

It must have a minimum of £50k allotted share capital, with at least 25% of this paid up into the business

For a PLC - can you have a company secretary?

Yes - but needs to be a member of a professional body

For the PLC - where do the accounts need to be shown?

At an AGM

Who pays Class 1 NIC?

Employees and employers on employees earnings