7 / 26
6
Business tax strategies
Business start-up
Starting your own business is one of the most fulfilling and
exciting things you can do in life, but naturally it can also be
risky. A whole series of crucial decisions will need to be made
in the start-up phase, which could affect the prospects of
success. We can provide expert, targeted advice and help you
avoid the common pitfalls. 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 on your
personal life. You should also think about how you plan to exit
the business when the time comes.
Business plans
Your business plan 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 advise on these important decisions, and help you
to make the appropriate registrations correctly. We can help
with cash flow forecasts, enabling you to spot potential cash
shortfalls, and offer regular updates to enable you to monitor
your business’s performance.
Your business structure
Deciding on the business structure that best suits your needs
isn’t always straightforward. There are pros and cons for
each trading structure, and each has 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.
Choosing a year end
It’s sensible to choose a year end that suits your business. Is
yours a seasonal 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? 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. Conversely,
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
While notifying HMRC of your employment status may seem
low on your agenda in those crucial first weeks and months,
if you are leaving employment and going it alone with your
own business, it is important to inform HMRC of your new
self-employed status as soon as possible. If and when you take
on employees (and for this purpose
you
will most likely be an
employee of your limited company, if you incorporate) 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. You will also
have to comply with the pensions auto-enrolment obligations.
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 for you.
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 deductible expenses
The tax system makes available various allowances to reduce
the amount of tax you are liable to pay, and our job is to help
ensure that you benefit from all of the opportunities available
to you.
You will pay tax on your taxable profits, so it is vital 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.
An appropriate computer package might be worth considering,
to aid concise and effective record keeping.