BUSINESS TAXATION ( Uinted KingdomTAX System ) Essay

BUSINESS TAXATION ( Uinted KingdomTAX System ) - Essay Example This often inclusive of the value, which the item was sold at. According a journal therefore understanding the different forms of taxation and meeting their obligations is of great importance to any business. One can save money by understanding what taxation involves in a given type of business whether a sole trader or partnership. As stated in the Tax Advisor (2012), a businessperson would also take advantage of any exemptions that they might be entitled to which would at the end boost the business. This paper will explain the terms and concepts in business taxation that will aid a clear understanding; it will assess the consequences that come as a result of incorporating a sole trader business, recommendations to the trader and finally whether the business qualifies for capital gains tax incorporation relief. A sole trader is a person who runs and operates a business on their own. The sole proprietor is liable for all the assets and liabilities of the business. Moreover, sole traders have full control of their business with all the profit. In 2012, The Tax Chartered Advisor stated that the taxation system for a sole trader in the UK allows one to complete a self assessment of their business. In this form, the sole trader is allowed to show total expenses, the total income and then subtracts to get the losses or profit for the business. Should the company show a loss then it does not owe the government otherwise, the business is taxed depending on the profits earned. An incorporated company is a form of business that is owned by one person who is the director with employees working for the company. This type of business is not solely owned by one person and decisions regarding the company are made as a group. With the new tax rates that were released in the UK, it has been realized that the best way to save money by avoiding paying a lot of taxes is through the start of companies. According to Payroll Practitioner (2009), the tax