...responsibilities of the tax practitioner in the UK tax environment 3 Executive summery 3 1.1 UK Tax Environment 3 1.2 The role and responsibilities of the UK Tax Practitioners 6 1.3 The tax obligations of tax payers or their agents and the implications of noncompliance 8 Task 2: Personal Tax Liabilities for Individuals and Partnerships 9 Introduction 9 2.1 a) Calculation of the relevant income and allowances for individual 9 2.1(b): Calculation of the relevant income, expenses and allowances of Mr. Thomas (self-employed): 10 2.2 Calculation of the taxable income and tax payable and tax payment due date for self employed 11 2.3 The relevant documentation and tax return 13 Conclusion 14 Task 3: Corporation Tax Liabilities for Companies 15 Introduction 15 3.1 Calculation of the chargeable profit for the company 15 3.2 Calculation of the tax liability of the company and when it would be due 16 3.3 Explanation of how income tax deductions are dealt with 17 Conclusion 17 Task 4: Capital Gains Tax for Individuals and businesses 17 Introduction 17 4.1 Identify the chargeable asset/s for capital gains tax 18 4.2 Calculation of the amount of capital gains/losses and the amount of taxable gains/losses 18 4.3 Calculation the amount of capital gains/losses and how much amount to pay as a capital gain tax liability 19 Conclusion 19 REFERENCES 20 Task 1: Duties and responsibilities of the tax practitioner in the UK tax environment Executive summery ...
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...Subdomain 310.1- Business Law A1a. Sole Proprietorship- One person owns the business. Unlimited Liability -Under sole proprietorship, only one person owns the business and there is no difference between the business and the owner. The owner takes full liability of everything that happens when operating the business. If a customer slips and falls, the business owner will be liable for 100% of any liability incurred. The personal and business assets are intertwined so if the business is sued, the owner could also forfeit personal property and assets as well. Any debt and obligation accrued by the business belongs to the owner as well. Income Taxes- “Pass-through” taxation. In short, the business taxes are filed under the owner’s individual tax return. Referenced from Nolo.com on “How Sole Proprietors Are Taxed”, when filing taxes for the business, the business income or losses are reported on Form 1040 under Schedule C (Profit or Loss from a Business). Also, with state and local income taxes, the business would have to pay any taxes required as a business. Continuity of the Organization- If the owner dies, the business dies. When the owner dies, the business dissolves. There is no continuity of the business after the owner’s death. Also, because it is a sole proprietorship, you cannot have partners or any other owners which could split liability in the business. The owner can sell or give away the assets of the business but not the business itself. Control...
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...Limited Liability Partnership, Limited Liability Company, S Corporation, C Corporation and Franchise. When deciding which business model is most appropriate, there are two major elements to consider: taxation and liability. Each of the above business models has advantages and disadvantages in these two areas. This paper will discuss the pros and cons of each business model and provide a scenario that illustrates when a particular model would best be utilized. Sole Proprietorship In simple terms, sole proprietorship refers to a business that is run by a single person. The sole proprietor enjoys all the profits as well as bears all the risks of the business (everymanbusiness, 2011). Pros Being one of the simplest of all business models, a sole proprietorship can be set up with very little effort. There is no special paperwork or extra fees involved in creating a sole proprietorship. In some states it is required to register the business, however, in other states it is not. The owner has the right to make all management decisions concerning the business, including hiring and firing employees (Cheesmen, 2011). Maintaining a sole proprietorship is much simpler than any other business model. Taxes are simplified with sole proprietorship as the business, and individual are considered as a single entity. The only tax that needs to be paid pay is the self-employment tax (everymanbusiness, 2011). Income tax details are reported on the owner’s regular personal income...
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...Sole Proprietorship A sole proprietorship refers to a form of organization owned by a single individual. In this business, a single person makes all the decisions and does not have to engage a legal department to approve contracts. The owner of such a business can only use personal funds even though he or she may have separate checking and savings accounts for the business. The first characteristic of this form of business enterprise is liability. A sole proprietor suffers from unlimited liability. The owner becomes liable personally for all the obligations and debts of the business. The second characteristic is income taxes. Businesses pay federal income tax just like individuals. In a sole proprietorship, the owner pays income tax only once on the business income, which he or she reports on their personal income form. The third characteristic is control. In a sole proprietorship, the owner makes all the decisions concerning the business. In this business, the owner does not have to grant control to other people. The fourth characteristic is profit retention. If a sole proprietorship makes profits, the money belongs exclusively to the owner. The reason is that the owner and the business are one. The fifth is location. The owner can move or expand the business to a different state without consulting anybody. This is because the owner is the sole decision maker. The sixth characteristic is convenience or burden. The owner makes sure that the business complies with all meeting...
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...partnerships do not need upfront agreements, but it is quite risky to operate without one (SBA, "Partnership"). When forming a Partnership, it is most important to register your business with the state the business will be conducted in. You also need to decide on a business name. Once the business is registered, the business needs to obtain licenses and any required permits. The license and permit required can affect the type of partnership that is formed (SBA, "Partnership"). The three different types of partnerships include: General Partnership, Limited Partnerships and Joint Ventures. General Partnerships mean that all profits, liabilities, and the duties of management are divided equally between the parties involved. A Limited Partnership is a bit more complex. Limited Partnerships allow each partner to have limited liability as well as limited input with regard to management of the business. Each of these limits is determined by what percentage each partner has. A Joint Venture functions only for a limited period of time (SBA, "Partnership"). Partnerships have advantages and disadvantages. Partnerships tend to...
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...Legal Forms of Business Legal Forms of Business Entrepreneurs face a difficult decision in choosing a legal form of business. The preferred form of entity is dependent on many relative factors, such as the type of organization and business environment. Different forms of legal businesses have different tax, investment, and financial implications. The best-suited business calls for a thorough analysis of pertinent facts before making a decision – requiring some careful planning and strategy. This study provides an analysis of seven forms of legal business. Sole Proprietorship Sole proprietorships are fairly simple and inexpensive to create and operate. Legally, a sole proprietorship is inseparable from its owner, and therefore the owner is personally liable for business debts (Cheeseman, 2010). The tax implications for a sole proprietorship are simple. The business owner reports profits and losses on their personal tax returns. Sole Proprietorship is the preferred form of business in establishing or operating a small business where personal liability is not a big concern. Sole proprietors own businesses in many industries. Some of the more common sole proprietorships are landscaping services, housecleaning services, independent writing services, and tutoring services. * Landscapers tend to work alone or hire a small team of employees, providing landscaping services to homeowners and businesses. Sole proprietor may take on independent contracts and projects...
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...run by one person. The characteristics of a sole proprietorship are the adequacies of credit and capital for the business is relatively small. The sole proprietor doesn’t share any responsibilities. ADVANTAGES * It is very easy to start a sole proprietorship. * State and local licenses and permits are the only legal forms needed. * A sole proprietor can start and terminate a business for whatever reason. * Work cannot be criticized by any bosses. * Decisions do not need to be made with a partner. DISADVANTAGES * The owner of the sole proprietorship, capital is limited by personal finance. * Fund raised from outside investors is difficult for a sole proprietor. * Talents and ability of a sole proprietor is limited. * If the owner gets sick or disable, the sole proprietor’s business will possibly decline. * Unlimited and unshared liability is the responsibility of the sole proprietor. GENERAL PARTNERSHIP With a voice in how the company is operated, each partner is fully active in the general partnership. The scope of all business activities are acted on by each partner with full authority. The characteristics of a general partnership are oral or written contract between partners. Partners agree to operate a business indicated in a business agreement. Provisions on how to settle differences includes each partner name, the nature of the business being conducted and the capital contribution of each partner. ADVANTAGES *...
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...requirements, dissolution and continuity, fundraising, managerial control, public ownership, tax planning, and limited liability.” The nature of the business being conducted has little to do with the way the business is organized. (Johnson, 2013) Sole Proprietorship: The basic concept of sole proprietorship is that there is no distinction between the individual business owner and the business. To start this type of business, in most cases, one only needs to begin charging money for goods or services. Because of its simplicity, sole proprietorship is the most common business structure in the United States. According to the U.S. Small Business Administration, “over 70 percent of businesses are owned and operated by sole proprietors.” (Beesley, 2013) Following are some of the characteristics that lend both advantages and disadvantages to this type of business organization. * Liability. As sole owner of a business, there is no severability of liability between the business and the individual. Therefore, all gains and losses of the business are also the gains and losses of the individual. The aspect of unlimited liability is one of the biggest disadvantages of this type of organization. Because there is no legal distinction between the business and the individual, if the business does not have the ability to fulfill its contractual financial obligations, the owner can be sued for their personal assets. The owner may also be held liable for the actions of any employee’s. ...
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...Task 1 Part A Sole Proprietorship A sole proprietorship refers to a form of organization owned by a single individual. In this business, a single person makes all the decisions and does not have to engage a legal department to approve contracts. The owner of such a business can only use personal funds even though he or she may have separate checking and savings accounts for the business. The first characteristic of this form of business enterprise is liability. A sole proprietor suffers from unlimited liability. The owner becomes liable personally for all the obligations and debts of the business. The second characteristic is income taxes. Businesses pay federal income tax just like individuals. In a sole proprietorship, the owner pays income tax only once on the business income, which he or she reports on their personal income form. The third characteristic is control. In a sole proprietorship, the owner makes all the decisions concerning the business. In this business, the owner does not have to grant control to other people. The fourth characteristic is profit retention. If a sole proprietorship makes profits, the money belongs exclusively to the owner. The reason is that the owner and the business are one. The fifth is location. The owner can move or expand the business to a different state without consulting anybody. This is because the owner is the sole decision maker. The sixth characteristic is convenience or burden. The owner makes sure that the business complies...
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... partnership, corporation, and limited liability company (LLC). To assist you in selecting the best structure for your business, I would like to discuss the benefits and drawbacks, as well as legal and tax implications of each structure. Sole Proprietorship A sole proprietorship is owned and operated by a single owner. It is the easiest, most inexpensive, and least regulated structure to organize. The owner receives all the profits and has full business authority (Parrino, Kidwell, & Bates, 2012). On the downside, the sole proprietor has unlimited personal liability, and the source of capital is restricted to the owner’s personal funds including the loan the owner can acquire. For tax implications, the sole proprietor benefits from flow-through taxation wherein the earnings and losses of the company are filed through the proprietor’s individual tax returns (Cheeseman, 2013). Partnership A partnership is a structure formed by two or more co-owners. General partnership enjoys the same benefits and drawbacks as a sole proprietorship. The principal advantage of a partnership is that it has more access to capital due to more than one partner funding the operations. The disadvantages are unlimited personal liability and legal responsibility for the action of partners (Cheeseman, 2013). An option to circumvent unlimited liability challenges would be to establish a limited partnership. Limited partners possess limited liability protection, but they cannot be involved...
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...------------------------------------------------- Tax Environment and Personal Tax Liabilities Prepared for: Mr. Jubred A. Peñano, MBA Unit: Taxation Banking Academy, Hanoi BTEC HND in Business (Finance) Prepared by: Nguyễn Ngọc Mỹ - Elena Class: S06 Submission Date: 5th November, 2014 Hanoi, November 5th 2014 Table of content INTRODUCTION This report will help Richard who intends to return to the UK business more tax. Because he lived in Vietnam for 15 years, so if he returned to the UK will not understand the tax laws so he probably would violate the law here. Therefore, this article will help him a clear understanding of the UK tax through tax environment as well as the tax duties and responsibilities of the Practitioner. In addition, Richard also personal property tax. The report includes: * UK tax environment * The role and responsibilities of you as the tax practitioner in the contexts of UK tax system. * Explain the tax obligations of tax payers or their agents and the implications of non-compliance * Calculate the relevant income, expenses and allowances * Calculate taxable amounts and tax payable, for employed and self-employed individuals, and advise on payment dates for the above cases * Complete relevant documentation and tax returns. (see HMRC website for relevant documents) Task 1: I’m Elena. I’m a practitioner of UK. I learned at the City University of legislation and taxation. I believe that I will help him understand the tax laws and regulations...
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...Business Entities, Laws, and Regulations Paper BUS/415 Business Entities, Laws, and Regulations Paper Businesses can range from the small mom and pop shops to worldwide corporations. Either way when establishing a business a decision will need to be made regarding the type of entity to use; sole proprietorship, general partnership, limited partnership, limited liability company (LLC), limited liability partnership (LLP), franchise, or corporation. Fortunately, there is guidance, tools, tax accountants, and lawyers to help make the right decision. To understand the different options available to entrepreneurs’, a review of two entirely different businesses should add insight. Mei-Lin is a manager for Surebuild, Inc. a construction company. Mei-Lin is trying to fill an open position for a jackhammer operator. Frank owns Bug Be Gone, Inc. and would like to open up franchises across the United States. Each business will be governed by some of the same laws, but there will be difference between the two businesses. Surebuild, Incorporated Surebuild, Inc. needs to hire a jackhammer operator, which requires a high school diploma. Three of the applicants being considerate have jackhammer experience but not all of them have high school diplomas. Applicant A is a 35 year old female, who appears to be pregnant, has jackhammer experience, and is a high school graduate. Applicant B is 55 year old male, has experience operating a jackhammer, but does not have a high...
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...proprietorship. 2. Partnership. 3. Limited liability partnership. 4. Limited liability company. 5. S corporation. 6. Franchise. 7. Corporate. 1. Sole proprietorship, The sole proprietorship is a type of business entity that is owned and run by one individual. All the decisions of the business are made by that individual and there is no legal distinction between that individual and the business. Following are the advantages and disadvantages of Sole proprietorship Advantages They have the ability to raise capital either publicly or privately. To limit the personal liability of the officers and managers. Limit risk to investors. Sole proprietorships have the least government rules and regulations affecting it. Owners have complete control over all the aspects of his or her business. The owner can take any managerial decisions that he/ she wants to take. Disadvantages Raising capital for a proprietorship is more difficult because an unrelated investor has less peace of mind concerning the use and security of his or her investment . The investment is more difficult to formalize other types of business entities have more documentation. The enterprise may be crippled or terminated if the owner becomes ill. The business is the same legal entity as the proprietor; it ceases to exist upon the proprietor's death. The enterprise rests exclusively on one person, it often has difficulty raising long-term capital. 2. Limited liability partnership (LLP) Following are the...
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... Limited Liability Companies are a hybrid. They share some of the same advantages of both the corporation and partnership (Reed,445). Corporations exist mainly to shield shareholders and owners from the liabilities of the company. The profits of the corporation are taxed both at the corporate level and on dividends. Limited liability companies are treated as nontaxable entities, much like partnerships. Partnerships are like the opposite of a corporation. At least one person must be responsible for company debts and litigation, but profits go directly to owners avoiding the "double taxation." Limited liability corporations offer limited liability protection to owners and members, and profits go directly to the members. Because an LLC is essentially the ideal business structure, many new businesses form as one. In an LLC owners are not personally responsible for company debts. This is the most important attribute of an LLC. In a partnership, the owners are personally responsible for business debts. If the assets of the partnership cannot satisfy the debt, creditors can go after each owner's personal bank account, house, etc., to make up the difference. By contrast, if an LLC runs out of funds, the owners are usually not liable. In 1988, the IRS changed its code so LLCs could be taxed as a partnership (Reed, 444). In fact, an LLC can choose whether it wants to be taxed as a corporation or partnership. According to, the federal government, an LLC is not a separate tax entity so...
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... Which Business Entity is Best? BUS670: Legal Environment Leah Westerman January 13, 2015 The first step of many, in the business process is determining the type of entity your business will be. According to Hopson and Hopson (2014) “Usually, concerns over minimizing personal liability, reducing taxes, or becoming more tax efficient drive a business owner’s decision to change the way a company does business.” The options for your type of entity include sole proprietorships, public held corporations, private held corporations, limited liability corporations (LLC), franchises and limited partnerships (LLP). Each type of business runs the risk of being sued for numerous reasons. However, the type of business you own will determine your personal liability exposure as an owner as a result of the lawsuit. A common lawsuit companies are faced with is for a breach of contract. A LLC is one of the smartest choices for a business. According to Hopson and Hopson (2014) “Despite its relative newness, the LLC is now the entity of choice for many because of its flexibility. It allows all members to participate in management, unless the owners elect otherwise in the company’s articles of organization. An LLC takes the advantages of a corporation and combines them with the flexibility and passthrough tax treatment of a partnership, has relatively inexpensive...
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