This is a guest post by Matthew Barton – Chartered accountant, Haines Watts Leeds
Once you have decided what your business is going to do and are ready to get that business started, the first decision you need to make is what legal structure you will use for the business. The main options will be sole trader, partnership or limited company. There is no one right choice and the right thing for your business will depend on your own circumstances.
If you decide to operate as a limited company, you will need to decide several things when setting the company up:
• Company name – it is always worthwhile checking the Companies House website, www.companieshouse.org.uk , to check the name is available.
• Directors – who will be running the business and taking responsibility for it.
• Shareholders – it is important to give this proper consideration, as the best time to get a tax efficient structure in place is before you start trading. Changes can be made later but become complicated.
If you either become self employed or form a partnership, you will need to register, or get someone to assist you in doing so, at www.hmrc.gov.uk for Self Assessment.
With a limited company, HMRC will issue a Corporation Tax reference to the newly formed company.
Taking on employees will trigger requirements to comply on both PAYE and Auto Enrolment pension schemes to meet the company’s obligations in respect of these employees.
This is never as straightforward an area as you think it might be. If you are doing taxable activities and your cumulative 12 month turnover exceeds the registration threshold then you will need to register. There are also other times registration could become compulsory. As well as this, it can be beneficial to voluntarily register. This is something that is always worth taking guidance on.
Once the business is up and running accounts will need preparing each year. For a limited company, these will be filed at Companies House. For a sole trader or partnership these are used to support the tax returns to HMRC.
Limited companies have to file a Corporation Tax return each year and pay Corporation Tax on their profits. Where businesses are run as either self employment or partnership the taxable profits are reported through Self Assessment and taxed on the individual through their tax return.
All business acting in the UK are subject to numerous laws and regulations, such as on Health & Safety, insurance and so on, some of which you may need to take guidance on.
Depending on what trade you are in, you may also have additional reporting and regulatory requirements with industry regulators.
If you are looking for some guidance with the above, please contact me on email@example.com or 0113 398 1157, I would be happy to discuss your queries on the above and how we can help you with getting your business started and fully compliant and then work with you going forward to grow your business.