Setting up a business

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The business I am starting up is a pizza take away business it will be called ‘Plant Pizza’. I have decided to become a sole trader. I chose to be a sole trader because I have unlimited liability, I will have complete control of the business and I will be totally responsible for its success or its failure. It is also simple and inexpensive to set up my business as a sole trader. I get to keep all the profits, although I realise I must save enough money to pay taxes, VAT, and interest on loans.

Some of the losses made in my first year may be offset, or balanced against money I have paid earlier in the same financial year towards tax. Also if one part of my business is not profitable I can quickly change to something else profitable. Some of the disadvantages of being a sole trader are because I have unlimited liability I will be responsible for everything including any debts to may occur. There is a very high risk of my business being a failure as there may be and usually is great competition from other business in the area.

It will be difficult to raise capital, but now days the government does make this easier. Because I am a sole trader I am by my self so I can only do a limited amount of work which will slow down the growth of my business. Two differences of running a business as a sole proprietor compared to running a business as a partnership are: 1. There is unlimited liability because if anything goes wrong two or more people are responsible whereas as a sole trader only one person is responsible leaving all debts and also all profits to one person.

2. Splits may occur between partners because both or more partners have a say in the way the firm is run, and one partner may have resentment that one partner is not doing there share of the work. 3. Aim to earn as much capital as possible in my first year of trading. My business is based inside Victoria Train Station; it is an ideal place because there are thousands of people that pass through the station every day, but in the same area there are two other rival businesses, they are called ‘The Pizza Factory’ and ‘Express Pizza’.

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