It’s a new year and the new years resolution of many will be to set up a business. Easier said than done. This article will walk you through the steps you must take to legally start up a business with the HMRC.
In order to set up a business there are several routes you may need to take, depending on where you talk and whether you employ people.
It is particularly simple to set up as a sole trade, however you are personally responsible for your business’s debts. Not only this but you also have accounting responsibilities
As a sole trader you are able to keep all of your business’s profits after you’ve paid tax on them. You’re personally responsible for any losses your business makes.
What are your responsibilities as a sole trader?
· To keep records of your business’s sales and expenses
· To send a self assessment tax return every year
· To pay Income tax on your profits and Class 2 and 4 National Insurance
If your turnover reaches over £83,000 you must register for VAT.
Naming your business
You are not required to register the name of your business to operate. However, you must include your name and business name on all official paperwork, e.g. invoices and engagement letters.
A sole trader must not include limited, ltd, Limited liability partnership, LLP, public limited company or PLC in their company names. Nor offensive language or existing trade mark names.
If you form a limited company, its finances are separate from your personal finances, but there are more reporting and management responsibilities.
Director of a limited company are responsible for
· Following company tax rules
· Keeping company records and reporting changes
· Filing your accounts and company tax return
· Telling shareholders if you might personally benefit from a transaction that the company makes
· Paying Corporation Tax
· Registering for a self-assessment and sending personal self assessment tax return every year.
Most get help from a professional such as an accountant.
A partnership is the simplest way for two people to run a business together. You can share the responsibly of your business’s debts. You still have accounting responsibilities, these include:
You may have other responsibilities depending on what your business does.
You should consider any licences or permits you may need and insurance; as well as the rules surrounding selling goods online, abroad or from abroad etc.