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Business tax strategies
Starting a business
Starting a business is an exciting and challenging experience,
and one which also carries a fair degree of risk. During the
start-up phase you will need to make all kinds of decisions that
could be critical to the long-term success of the enterprise.
You’ll need to consider such things as: the type of business
and its attributes; your target market and competition; profit
potential and how you will extract those profits; the rate of
business growth; and the impact of running the business on
your personal life. At some point, you’ll also need to consider
how you will exit the business when the time comes, and realise
its value. We can provide expert, tailored advice and help you
avoid the common mistakes.
Writing a business plan –
One of the first things you need
to consider is your business plan. This is not only for the
benefit of potential investors, but to help you stay on the
right course in the short, medium and long-term. It should
include: the business structure that best meets your needs
(such as: sole trader, partnership, limited liability partnership or
limited company); your intended funding sources; tax-efficient
borrowings; whether a PAYE scheme is necessary; and whether
the business should be VAT registered.
We can guide you through these important decisions, and help
you to complete the appropriate registrations. We can assist
with cash flow forecasts, helping you to spot potential cash
shortfalls, and provide regular updates so you can monitor your
business’s performance.
Choosing your business structure –
Deciding on the
most appropriate structure for your business isn’t necessarily
straightforward. Sole traders, partnerships, limited companies
and limited liability partnerships all have their own pros and
cons, with different implications for control, perception,
support and costs. For example, careful consideration is needed
regarding whether or not to retain personal ownership of any
freehold property on incorporation. We can help you to decide
on the best structure for your business.
Deciding on a year end –
It’s also important to choose a year
end that suits your business. Is there a time of year when it will
be more convenient to close off your accounting records, ready
for us? What time of year would be best for stock-taking? Is
your trading seasonal? From a tax perspective, choosing a year
end early in the tax year for an unincorporated business usually
means that an increase in profits is more slowly reflected in
an increased tax bill, and over time the delay between earning
profits and paying the tax can create a source of working capital
for the business. On the other hand, a decrease in profits will
more slowly result in a lower tax bill. Speak to us for advice
about choosing your year end.
Registering with HMRC –
When you start a business, it is
important to inform HMRC of your new self-employed status
as soon as possible. If and when you take on employees you
need to register for and set up a PAYE scheme and accept all
the responsibilities and obligations that go with it, including
compliance with Real Time Information reporting (and
remember for this purpose
you
will most likely be an employee
of your limited company, if you incorporate). You will also
have to comply with the pensions auto-enrolment obligations,
although exemptions apply to director-only companies so do
get in touch for advice in this area.
Please talk to us as soon as you envisage having employees so
we can help you set up a PAYE scheme and comply with your
payroll obligations, or take on the task on your behalf.
Starting a Business –
Action Plan
✔
Prepare a robust business
plan
Ensure that you have access
to suitable funding
Check your right to use your
chosen trading name
Choose the right business
structure
Register with HMRC
Register for VAT
Register your business name
Trade and professional
registrations
Choose your year end
Plan to reduce your tax
liability
Develop your branding
Involve the family
Plan to avoid fines and
penalties
Claiming expenses
As your accountants and tax advisers, our job is to help ensure
that you benefit from all of the allowances and reliefs available
to you. You will pay tax on your taxable profits, so a crucial
element of tax planning is to claim all deductible expenses,
many of which will be included in your accounting records.
If you are self-employed and carry on your business from home
you can claim tax relief on part of your household expenses,
including insurance, repairs and utilities. You may also be
able to claim for the cost of travel and accommodation when
you are working away from your main place of business, so
you should keep adequate business records, such as a log of
business journeys. In addition to ensuring that your accounts
are accurate, these records may also be requested by HMRC.