Karen Szotek BSc ACCA
Joanna Grant BSc ACA
If you are thinking of starting a business, or have recently done so, there is a whole raft of different issues you will need to address - product/service development, premises, equipment, marketing, staffing, pricing, bookkeeping, VAT, payroll, pensions…. – the list seems never ending. Most of the problems fall on you, it is your business after all, but good, professional advice can help relieve at least some of the pressure. That’s where we come in.
There are a number of possible alternative types of structure but the most likely are sole trader, partnership, or limited company. Each of these structures have their own advantages and disadvantages. You need to consider potential personal liability, the relative administrative burden, expected profits (or losses), the need for outside finance, how many people will be involved in the business, and much more. There is not one right answer for everyone. We can guide you through the alternatives and help you choose the most appropriate – you need to get this right!
You will need to keep records of your business transactions so that you can tell if you are making profit, if there is enough cash in the bank, how much VAT you are due to pay HMRC (if you are VAT registered), how much money you need to collect from your customers, and how much you are due to pay your suppliers. Your bookkeeping records will also form the basis of your annual accounts which will be needed for many purposes including determining how much tax you are due to pay. There is no rule that says exactly how these records need to be kept but you may need to consider one of the many software packages or perhaps use some of our specially tailored spreadsheets designed for you to make this task as easy and efficient as possible.
The tax you will pay depends on the business structure you have chosen, the profits made, and the way in which those profits are distributed. This is very complicated. In any one year you could be paying a combination of corporation tax, income tax, dividend tax, national insurance, and even capital gains tax. You need expert professional advice on how to organise your affairs in the most tax-efficient fashion, without impacting on the success of the business.
Employee staff in your business may well be unavoidable but will result in the addition of a significant administrative burden. Dealing with the employees poses enough problems but, in addition, you will have to deal with all the duties placed on employers by HMRC. You must pay your employees at least minimum wage or living wage and from this you must collect tax and national insurance and remit this to HMRC. You must also correctly calculate and manage statutory sick pay, statutory maternity pay, statutory paternity pay, student loan repayments, and arrestments. It is likely that you will also have to establish and operate a suitable pension scheme. Our payroll department can relieve you of most of this burden. All you’ll need to do is pay the wages.
These obligations are likely to be greatest for limited companies. We can set up your company and then handle all the recurring requirements placed on you by Companies House. We will also deal with the submission of your annual accounts to Companies House and HMRC.