Most appropriate structure: Sole Trader, Partnership or Ltd Company
In general, companies have tax advantages when they are profitable. For example any profits over £50,000 can save tax and National Insurance of £4,000 + if you take the majority of your earnings as dividends. However, if you have losses in your early years you may wish to set these off against other income if you trade as a sole trader or partnership.
Save Money - Avoid Charges
Don’t incur pointless penalties!!!! Avoid these by making sure you register your new business with HMRC straight away. To do this complete a form SE. With accounting software tools such as QuickBooks Online - it is also easy to avoid penalty charges from HMRC as you can file your VAT returns straight to the relevant authorities straight from your account. Ensure your tax returns, statutory accounts and any other required company returns are filed with time to spare to Companies House and HMRC using low cost tools such as TaxGo and save yourself double the money!
Register for Vat in time
Don’t forget - as soon as your turnover reaches £73,000 for the last 12 months it is compulsory to register. And penalties can be high so make sure you register and save yourself the stress. It might also be worthwhile registering voluntarily before reaching the compulsory threshold, by reviewing your cash flow forecast.
Register for Flat Vat Scheme if you are a Small Business
If your turnover is less than £150,000 a year you may opt for the flat rate scheme, the VAT you pay is calculated by multiplying your gross sales by a flat rate determined by the business sector your work in.
Drive a company van rather than a car to save tax
The income tax charge can be much less than for many large cars. Although the taxable benefit for driving a van is £3,000, this can be avoided if the van is only used for ordinary commuting and not for significant personal use.
Record all your expenses
Ensure that you record and claim for all your business expenses that you incur, such as mileage, postage, parking, over a few years these can be a considerable cost and these could all reduce your tax liabilities.
Author: Amy Hayes
the head of getting stuff done
20 Imperial Square, Cheltenham, GL50 1QZ
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