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Money matters and your small business


So you're starting up your own business. Or you've just launched.


But do you know what you need from a business compliance point of view....?


Before we get started, have you read the first part of this blog, "Where to start with starting your own business"


If not, go and have a read because it's packed with all the essentials.


Then read on...


Tax


When starting in business, taxation aspects must be considered.

Taxation on profits

The type and rate of taxation will depend on the form of business structure. However, the taxable profit will normally differ from the profit shown in the accounts due to certain expenses which are not allowed for tax purposes and the timing of some tax allowances.


National Insurance (NI)

The rates of NI contributions are generally lower for a sole trader or partnership than for a director of a company but the entitlements can also differ. In a company, it may be possible to avoid NI by paying dividends rather than salary. There are also some incentives available to small enterprises.

Value Added Tax (VAT)

Correctly accounting for VAT is an essential part of any business and neglect may result in a significant loss.

When starting a business you should consider the need to register for VAT. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register. If you are VAT registered you will also need to consider appropriate software to ensure that you comply with the Making Tax Digital requirements for reporting to HMRC.


Employing others


For the business to get off the ground or to enable expansion, it may be necessary to employ staff.

It is the employer's responsibility to advise HMRC of the wages due to employees and to deduct income tax and national insurance and to account for student loan deductions under PAYE. The deductions must then be paid over to HMRC. Payroll records should be carefully maintained.


Under Real Time Information an employer must advise HMRC of wages and deductions 'on or before' the time they are paid over to the employee.

Employers are also required to automatically enrol all eligible employees in a pension scheme and to make contributions to that scheme on their behalf. Enrolment may be either into an occupational pension scheme or the National Employment Savings Trust (NEST).

You will also need to be familiar with employment law.


Pensions


Putting money into a pension scheme can be a way of saving for retirement because of some favourable advantage through the tax rules. There are also obligations towards facilitating pension saving for employees.


Business stationery


There are minimum requirements for the contents of business stationery, both paper and electronic, which will depend on the type of business structure.


Premises


There are many pitfalls to be avoided in choosing a property. Consideration should be given to the following:

  • suitability for the purpose

  • compliance with legal regulations

  • local by-laws

  • physical restrictions such as access.


So what next?


Argo Business Compliance can help you with professional advice, always aimed to improve effectiveness and efficiency.

We also provide personal tax advice and support.


So if you'd like more bespoke advice or to have a free initial consultation, please get in touch via the Contact page.