Starting up in business
Starting a new business requires energy and dedication. It’s a time for ideas and plans. It’s also the time to ensure the structure, or type of business is set up to be sustainable and tax efficient. We'll work with you to make your new business flourish.
We'll spend as much time as you need to talk through your plans and we'll advise you on all aspects of setting up your new venture. After our meeting we’ll send you a quote/estimate with a tailored report containing useful advice and suggestions.
What we can do for you
- Provide you with simple digital bookkeeping tools
- Register your business with HMRC
- Carry out VAT registration and quarterly VAT returns
- Arrange your CIS registration and admin (construction)
- Carry out all annual accounting functions
- Monthly /quarterly payroll, including ‘RTI’ and end of year submissions
- Self-Assessment Income Tax returns / Partnership Tax Returns
- Business and Financial - set up and monitor plans and budgets (keeping it simple!)
- Credit control systems
Creating Results for your Business
When you’re setting up a business – it’s worthwhile to spend time with experienced planners. It’s essential to carry out a ‘reality check’ to make sure that your plans are realistic in regard to timings, financials, people, even things outside your control. Our simple way of working with you will help you to create a complete business plan. This process is a confidence boost for any business.
Contact Us to arrange an appointment. We can meet inside or outside business hours and we are happy to visit you - or you are welcome to come to our offices in west Swindon (free parking available).
Different types of business
Sole Trader (self-employed) Trading as a Sole Trader is most suitable for a business which is subject to minimum risk and it is the easiest way to become self-employed. The set up requirements are minimal - all you need to do is register with HM Revenue & Customs. Ongoing – you’re required to submit annual accounts to HMRC as part of your Self-Assessment Income Tax Return which determines your profits (or losses). National Insurance and Tax are calculated on your profits. You will be taxed personally on all profits that the business generates. This means that you will be paying tax at the highest rate that can be charged against you.
In the event of you owing money to creditors, your personal assets would be treated as your business assets. This is because you don't have limited liability (ie, you don't have a Limited Company). This can be significant if your business gets into financial difficulties. You could also find it difficult to attract financial investment because an investor or lender might feel that a Sole Trader isn’t as safe or as established as a Limited Company.
This is where 2 or more people form and run a business together. It is very similar to the Sole Trader set up in that the registration and running requirements are very simple.
A significant factor is that each partner is subject to liabilities (jointly and severally liable) that are not limited. Your personal finances and assets could also be at risk through poor decisions made by your partner. It is important to set out a Partnership agreement to state what percentage of profit each partner receives. Then, as with a Sole Trader, each partner would be taxed at whatever is the highest tax rate applicable for them personally. The strength of a good Partnership relies on the partners continued relations and trust in each other's decisions and actions.
Limited Liability Partnerships (LLP)
Another form of Partnership is called a Limited Liability Partnership (LLP). Here the potential losses of the partners are limited to the assets of the business, similar to a Limited Company. However, the Partners themselves are still taxed as if they are in a normal Partnership.
This is a legal entity which is separate from its owners. It can trade / own assets (such as offices and equipment) and it can incur liabilities in its own right. Therefore if the Company has financial difficulties, the personal assets of the owners are not at risk. Instead, the assets and investments and cash in the Company bank account are at risk. The forming, registration and running of a Limited Company are more demanding than setting up as a Sole Trader or in a Partnership. This is due to the requirement to comply with the rules set down by the Companies Act.
The way companies are taxed means that tax payers are not automatically taxed at the highest income tax rate. For instance, the Company itself pays corporation tax which is a lower rate (20%) than an individual’s Higher Income tax rate (40%). So, a Company can choose to pay profits (dividends) to the owners at a time which suits their personal tax situation. This means that some profit can be held back in the Company bank account until it is needed, deferring the tax liability until later on (called sheltering). These are issues which require the help of an accountant.
Anyone gaining work through an agency must either be paid via the agency payroll or work through a Limited Company. The tax payable by a Freelancer with a Limited Company is affected by the IR35 Rules and a Freelancer must decide whether their work is like that of an employee or a self-employed person. For example, if you are given instructions on what work to carry out and you are supervised in your work, this indicates fail IR35. If you are working more like a consultant and in business on your own behalf this indicates pass IR35. There are many other rules to consider and there is a great deal of documentation available. For more information on IR35 and the rules of Freelance Contracting please call us on 01793 818400.