So a lot of the time I notice people get confused with the difference between a ‘Business’ and a ‘Company’. Many think there are no differences between the two and use either term to define a working establishment, but the two are in-fact not interchangeable and there are clear set differences between the two. So today’s blog is just going to simply outline the key differences between the two:
A business is a person or group of people who are ‘trading as’ a business name.
A company is a legal entity set up with an official name set up with Companies House.
A business is set up by individual people being self-employed as either a sole-trader (one person) or partnership (more than one person) with the HMRC.
A company is set up as a ‘Limited Company’ with the HMRC, will register the company name with Companies House and is then provided a Certificate of Incorporation as proof of the company status.
A business is ‘owned’ by the people who are self-employed and ‘trading as’ the business – they are wholly liable for all debts and legal responsibilities.
A company is its own legal entity, therefore the company is responsible for itself and is liable for all debts and legal affairs. The company entity is then owned by shareholders/directors who will each own a ‘share’ of the company and are responsible for that much of the company (e.g. If someone owns a 30% share of the company they are liable for 30% of the company).
A business will be the self-employed individual(s) responsibility to file a self-assessment tax return at the end of each tax year. If the business is set up as a Partnership then an additional ‘Partnership Tax Return’ must be completed by the partners of the business.
A company has to file a ‘Corporation Tax Return’ at the end of each tax year which will encompass all aspects of the company’s tax affairs.
A business will then have each self-employed person(s) paying tax via Self Assessment and National Insurance Contributions upon completion of the self-assessment tax return.
A company will then be liable for paying ‘Corporation Tax’ upon completion of the ‘Corporation Tax Return’ at the end of the tax year.
I hope that helps and if you want anymore information just contact me at firstname.lastname@example.org
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