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Review Your SQE 1 Practice Records

Examination Timing: 00H00M01S

Emily wishes to set up her own bakery business. She has a small amount of capital. Her family home is owned by her husband who provides for all the family needs. Emily would like to involve her sister, Sarah, in the venture, but Sarah, although interested and a talented pastry chef, is not a risk taker and is not very good at making business decisions. Emily is unsure how long the venture might last and whilst she is willing to risk her money, she still likes to withdraw it without complications whenever she needs it. 

Which of the following best suits her venture goals? 

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Emily has expressed a wish to keep the business as simple as possible, which suggests a sole trader model. Her circumstances do not indicate the need to protect her personal assets, which would be achieved by using a limited liability model, either an LLP or Ltd. By commencing as a sole trader, her business can run flexibly and she can wind up the business at any time without the complications that would arise if she were to run it as a limited company. As a sole trader, she will also avoid the trouble and expense of filing requirements with Companies House.

Key Point: A sole trader structure offers simplicity and flexibility, allowing the business owner to operate with minimal regulatory burden and to easily wind up the business if needed.

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