When you decide to start your own business you have a long list of decisions ahead of you, our resources will help you with some of them.

We aren't going to go into the blood, sweat and tears that you will spill in getting your business ready for market, only those decisions you need to make sure that the HMRC doesn't come angrily knocking at your door!

One of the First Big Decisions... What business entity will your company have?

  • Many businesses begin their lives as Sole Traders.
    • Sole Traders run their own businesses and are self-employed.
    • They are personally responsible for any losses made by their business and in turn are entitled to keep all of their post tax profits.
    • A Sole Trader may have employees as long as they remain the sole owner of the business.

  • However there are other options available, such as a Partnership.
    • Which is where you set up a business with another or others,
    • and you personally share the responsibility for your business, including:
    • any losses your business makes and any expenses incurred in the running of your business.
    • Tax is paid individually by the Partners on their share of the businesses profits.

  • And then there are a range of Limited Company entities,
  • Limited companies are legally separate from the people who run them, have finances separate to the personal finances from the people who run them, and
    • Private limited by Shares - have shares and shareholders, who can keep the companies post tax profits.
    • Private limited by guarantee - have guarantors and a guaranteed amount, and invest their profits back into the company.

  • And a range of Social enterprise options, including a Charitable Incorporated Organisation (CIO), Community Interest Company (CIC) and a Co-Operative.

Each business entity has it's own requirements and reporting processes and Add Liv Ltd is here to ensure that you never suffer even the smallest of headaches in meeting them!

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Another Big Decision... VAT Registration.

Ok so this one might not actually be a decision after a certain point in your business, once your VAT taxable turnover exceeds £85,000 then registration is compulsory*. However, as a business you can opt to register early if it is beneficial for your business to do so.

Registering for VAT allows you to reclaim the VAT on your business purchases, meaning that if you pay more VAT than you collect from your customers there may be a financial benefit to registering early.

Registering will increase your workload though as you will have to make sure that you:

  • Charge VAT correctly,
  • Pay any VAT that's due,
  • Submit your VAT returns,
  • Keep VAT records and use a VAT account, and
  • follow HMRC's Making Tax digital for VAT rules.

Once you have hit the threshold, or make the decision to register for VAT you will need to register for VAT online, or using form VAT1 where online registration is not possible, and then set up your online VAT account.

VAT payments become payable from the date you become VAT registered, which is back dated if you complete your application late.

You may be able to reclaim VAT on goods and services purchased prior to your VAT registration with in your first VAT return, and you should speak to the team at Add Liv Ltd about what options are available to you.

* there are other events that may trigger the requirement to register for VAT, including but not limited to taking over a VAT-registered business, or buying goods for more than £85,000 from EU VAT-registered suppliers when your goods and services are exempt from VAT or 'out of scope'.

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Possibly the biggest decision yet...Becoming an employer

First things first, becoming an employer isn't your only option, if your business finances will be stretched uncomfortably by taking on an employee you can look at freelancers to pick up on those tasks that are too much for you alone now.

As a business owner you must be aware of IR35 regulations before taking on a freelancer, which is to say you should be sure that the freelancer that you hire is in business in their own right and can not be seen as an off-payroll employee of yours.

Freelance contractors allow you to access a wealth of experience and knowledge utilising a self contained hourly or daily rate, with no extra costs to worry about.

Once you are ready to take on employees you need to be aware of the following:

  • Wage - must equal or exceed the national minimum wage,
  • National Insurance contributions,
  • Compulsory Employee Benefits eg:
    • Pension contibutions,
    • Maternity/ Paternity/ Adoption Leave,
    • Sick Pay, and
    • Holiday Pay.
  • Optional Employee Benefits eg:
    • Life Assurance,
    • Private Healthcare,
    • Enhanced Sick Pay,
    • Enhanced Maternity/ Paternity/ Adoption Leave,
    • Bonus payments,
    • Staff events, or
    • Enhanced Pension contributions.
  • Hiring and Onboarding costs,
  • Training costs, and
  • Equipment, Tools and License costs.

An employee in receipt of the £9.50 national minuimum wage for 37.5 hours a week with only the compulsory benefit package and average training/ onboarding and equipment costs will cost your business approximately £24,300 in their first year.

Having the support of a good Bookkeeper and Accountant once you have a payroll and a Pension Scheme to handle is essential!

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Important Dates

Month Day Event
April 6th First day of the new tax year
19th Deadline for final PAYE submission to be made for the tax year ended 5th April
22nd Deadline for final electronic payments of PAYE tax and Class 1 NIC's for the previous tax year to reach HMRC.
30th After this date daily penalties will start to be charged in respect of any unfiled Self Assessment (SA) tax returns which were due on 31 January, i.e. 3 months previously.
May 3rd Deadline for submitting paper P46 (CAR) notifying HMRC of any changes to company cars in the quarter ending 05 April.
31st Last day for giving any employees who were employed on the final day of the previous tax year (05 April) their form P60 for the year.
July 6th Deadline for filing forms P11D and P11D(b) for the previous tax year with HMRC.
6th Last day for giving any relevant employees their copy of form P11D for the previous tax year.
22nd Deadline for electronic payments of Class 1A NICs for the previous tax year to reach HMRC.
31st Deadline for second SA payment on account due for the previous tax year to reach HMRC.
August 2nd Deadline for submitting P46 (CAR) notifying HMRC of any changes to company cars in the quarter ending 05 July.
October 1st Due date for payment of Corporation Tax for years ending on 31 December, i.e. nine months previously.
5th Deadline to notify chargeability for Income Tax/Capital Gains Tax for the previous tax year if you need to file a return, but are not already registered for SA. Notification to be made using forms CWF1/SA1/SA400 as applicable.
31st Deadline for submission of hard copy paper SA tax returns for the previous tax year.
December 30th Deadline for online submission of SA tax returns for the previous tax year for HMRC to collect the tax through the following year’s PAYE tax code, where the tax owed is less than £3,000.
January 1st Due date for payment of Corporation Tax for years ending on 31 March, i.e. 9 months and 1 day previously.
31st Deadline for electronic submission of SA tax returns for the previous tax year.
31st Deadline for SA ‘balancing payments’ for the previous tax year to reach HMRC.
31st Deadline for first SA payment on account for the current tax year to reach HMRC.
April 5th Last day of the tax year