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Starting up in business
Starting a new business requires a lot of energy and dedication. It is the time when structure needs to be put in place to ensure that the business is sustainable on every front. We'll work with you and help your business to flourish.
In our experience too many people lose money further down the line because they did not set things up to their advantage in the beginning. We'll spend as much time as you need to talk through your plans and we'll advise you on what is the most tax efficient and profitable business structure for your circumstances.
We'll discuss our costs with you and provide a written quote for the first year and we'll also give you a good idea of what you need to spend to set up your venture.
What we can do for you
- Provide you with simple bookkeeping tools to help manage and control expenditure
- Register your business with HM Revenue & Customs
- VAT registration and quarterly VAT Returns if appropriate
- If you are in Construction - advise & help you to make your CIS registration and handle the administration
- Produce annual accounting information for HM Revenue & Customs, and for Limited Companies - submission to Companies House
- Monthly or quarterly payroll as appropriate plus all Annual Returns (P35 P60's etc.)
- Completion of Personal Tax Returns / Partnership Tax Returns
- Business and Financial - set up and monitor plans and budgets (keeping it simple!)
Contact Us to find out how we can work together. We are happy to visit you - or you are welcome to come to our offices in west Swindon.
Read on for descriptions of different business types
This 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 are required to submit annual accounts to HMRC which determine your profits (or losses). National Insurance and Tax are calculated on your profits. All of the profits are taxed on you personally, which means that you will be paying tax at the highest rate that can be charged against you.
Your personal assets are treated as your business assets because you don't have limited liability (you don't have a Limited Company). This could be significant if your business gets into financial difficulties. You could also find it difficult to attract financial investment because an investor might perceive that a Sole Trader cannot offer a money making vehicle in the same way as a Limited Company can. Being a Sole Trader is most suitable for a business which is subject to minimum risk.
Partnership and Limited Liability Partnerships (LLP)
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 (as in a Limited Company).
Your personal finances and assets could also be at risk through poor decisions made by your partner. A Partnership agreement would say what percentage of profit each partner receives and 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. 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, more similar to a Limited Company.
This is a legal entity which is separate from its owners. This means 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. Whatever cash or investment the Company has is at risk however. The risk is limited to whatever the Company owns (assets) and cash in the Company bank account.
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 not all profits are automatically taxed at the highest rates. For instance, the Company itself pays corporation tax which is a lower rate than the individual higher rate tax bracket. A Company can choose to pay profits (dividends) to the owners at a time which suits their personal tax situation. This 'sheltering' means that some profit can be held back in the Company bank account until it is needed, deferring the tax liability until later on. These are complex issues which require the help of an accountant.
Anyone gaining work through an agency must either be paid through the agency payroll or work through a Limited Company.
The tax payable by a Freelancer 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 instance being instructed on what work to carry out and being supervised in their work = fail IR35, while working more like a consultant and in business on their own behalf = pass IR35. There are many other rules to consider and there is a great deal of documentation available. If you would like to discuss IR35 and the rules of Freelance Contracting please call us on 01793 818400.