Welcome to the Hill Lillis & Company Tax Tips.
One of the most challenging things you may do is to set up a new business, our primary advice is “Do what you love, love what you do”. Your business is going to be your livelihood – you should have a good time doing it, but make sure you get the ground work sorted from the outset; it helps to prevent a whole load of future problems!
Firstly you need to decide how you are going to trade; the main choices are as a sole trader; as a partnership, through a LLP or through an incorporated structure. Each has different tax and accounting consequences and needs to be registered in a different way. Once you have set up the business you will need to notify HM Revenue & Customs:
- A limited company needs to be register for Corporation tax
- A sole trader or partnership needs to register as self-employed and this will also include registration for class 2 self-employed national insurance.
- CIS registration is necessary if you intend to work within the construction industry
- If you have employees then you will need to set up a payroll system and operate PAYE, advising HMRC as you make payments to your staff.
- VAT registration is also necessary if your turnover exceeds the relevant thresholds. For certain B2B trades you might wish to consider registering for VAT even if you do not expect to reach these thresholds, particularly if there is a flat rate VAT scheme that can be used to simplify your VAT computations.
As well as notifying HMRC there are many other factors you will have to consider for your new business:
A Business plan is very useful; it enables you to set out your goals and plan how you will achieve them, particularly how your cash flow will cope.
Your business will probably need a business bank account and you may need to obtain additional start-up funding.
You will probably need to arrange business insurance, this could include public liability, employee liability, trade insurance, professional indemnity, premises or vehicle insurance.
You will need to ensure you are keeping proper business records.
We offer a free 30 minute consultation, so if you would like any additional information regarding the above or any other tax issues concerning you, then please contact us or visit us in our offices in Walmley Village, Sutton Coldfield.
This article appears in Walmley Pages Magazine, delivered free to homes in Sutton Coldfield, postcode B76