24 Aug Starting your own Business Tax and Vat
If you are thinking about starting a business, you should begin by writing a business plan. This outlines the ideas you have for your product or service.
You can get help for your business ideas from:
- The National Enterprise Network (England)
- Business Gateway (Scotland)
- NI Business Info (Northern Ireland)
- Business Wales (Wales)
Once you have written your business plan you should research the market, find partners and then set up your business. It is at this stage that you need to decide how you will run your business. This could be as:
- A Sole Trader
- A Limited Company
- Business Partnership
- Limited Partnership/Limited liability Partnership
After this you must register for tax and the way you do so, depends on whether you are a sole trader, a limited company or a partnership.
You will run your business as an individual and you will be classed as self-employed. You must register for self-assessment and you can do this online. Each year you will need to send in a self- assessment tax return and you will pay tax on your profits and National Insurance. If your income goes over a certain level you will also have to register for VAT.
You set up a company, which is entirely separate from your own personal finances. A company has shareholders and a director. The company pays corporation tax and profits are shared out once all the expenses have been paid.
As director you can hold shares if you wish, but it is not obligatory. You will need to register your company for Corporation Tax, which you can do online.
You need to register the name and address of the company and its directors. You will also have to declare the share capital of each shareholder. Every year you will have to fill in a self-assessment tax return with details of salaries that have been paid and any dividends made by the company.
Limited Partnership and Limited Liability Partnership
Like a business partnership, the profits are shared between partners and tax is paid on the profits. However, you are responsible for all the `partnership debts unless you have a Limited Liability Partnership. This can’t be set up online you must fill out and send in a Partnership self-assessment tax return each year. Each partner in the company must fill out their own self-assessment tax return and pay income tax and national insurance. If the company takes more than a certain amount each year they must also register for VAT. At present that rate is £82,000 a year.
Although it is the same as a business partnership as far as shares and profits are concerned. You will only be liable for the amount of money you invested in the business and not for all of the partnership debts.
If you would like to know more about Starting up your own business or registering for tax or VAT, SQK Accountancy in Manchester can advise you on all your business needs. We aim to provide a first class service at an affordable price. Contact us by filling in the form on our contact page or telephone us on 020 8798 0657 today.