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Reggie the Handyman

Reggie the Handyman
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Meet Reggie, he started working as a DIY contractor in 2015. He provides handyman services like painting, decorating, kitchen and bathroom installation, tiling and basic plumbing. He sometimes employs an assistant, but carries out most jobs by himself. He is good at what he does - and so has built up a reliable and regular customer base. During this time, Reggie has been operating as a sole trader. But as his business grows, so do customer demands. Projects are becoming difficult for Reggie to manage by himself and often require specialist skills such as carpentry and furniture design that he isn’t as familiar with. It’s time for Reggie to expand. He enlists a good friend who specialises in carpentry; they decide to combine their services.
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Reggie carries out all the DIY work, and his friend takes care of the carpentry related work. Reggie is no longer a sole trader. He is now in a partnership business. But does going from a solo, to a double act have any legal implications? Luckily, the business Reggie runs with his friend does not have to officially register as a separate company, because Reggie and his friend are the business. In other words, if Reggie and his friend decided to take a day off work, the business does not operate either - it cannot exist separately from them. But they do have specific tax obligations. Normally, it’s the duty of the business to work out and pay our taxes on our behalf.
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But because Reggie and his friend are the business, they must work out their own expenses and tax by themselves. Both a sole trader and partnership business structure requires that expenses and income be calculated annually, after which income tax needs to be paid. Income tax based on the total income after expenses have been deducted. This process is referred to as an “income tax self-assessment”. Sole traders and partnerships operate with unlimited liability. This means they’re responsible for all the debts of the business. We will explore this concept and look at sole traders and partnerships in more detail in the sections that follow.

You are about to watch a video that describes how a sole trader business and partnership operate. The video gives the example of a small DIY business and how it looks to expand.

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