Starting a new business?
Should I set up a Ltd company or be self-employed?
The question isn't that simple (it costs more to run a limited company, for a start), and there are other considerations, such as your personal liability for the business's debts.
A limited company is likely to give you more flexibility to pay yourself in a tax advantageous way. That's because if you're self-employed as a sole trader, YOU are the business and you pay tax on the profit.
If your business is a limited company, it is seen as a separate legal entity. Income earned by a Limited Company belongs to the company and its shareholders.
All in all, for an income of around £50,000, you might save £3,000 to £4,000 in income tax and NI, but pay an extra £500 to £1,000 in fees, by being a limited company. Under £50,000 income you generally wouldn't benefit from being Limited.
When Should I register for VAT?
VAT is a tax charged on most business-to-business and business-to-consumer transactions.
You must register for VAT if your turnover in any 12 month period is over a specific limit - this limit is normally increased annually in the Chancellor's Budget - or if you think your turnover may soon go over this limit. You may register voluntarily at any time.
Once registered for VAT, you need to fill in and submit regular VAT returns online, and pay any VAT due electronically.
From 1 April 2010, all new businesses registering for VAT on or after that date will have to submit their returns online and pay electronically any VAT that is due.
What Business expenses can I claim?
There are lots of business expenses you can claim - the more obvious ones being Phone costs, office expenses, Business Rates, advertising, business Mileage, Networking/advertising etc - Essentially any expense incurred in the course of doing business including some (but not all) business lunches!
Have you considered the following?
- When do HMRC need to know that I have set up a business?
- What tax will I be liable to pay and should I start saving?
- How do I estimate the Capital I need to start up?
- Do I need a separate bank account?
- Do I need a business plan and how do I formulate one?
- Do I need to complete a Tax Return?
- Why can't I pay Suppliers cash?
- Do I need a bookkeeper?
- Do I need an Accountant?
- What's a network and do I need to join one?