When you’ve decided to start up a new business, there are many exciting aspects to plan and organise; the launch of the business, the marketing of the brand and the first order received and shipped out.
One of the less exciting aspects is handling your tax affairs once you are self employed. This is a very important area to organise as soon as you decide to become your own boss because if you leave it for a while you could end up with a complicated situation and even the possibility of backdated tax bills or even unwanted penalties.
HM Revenue & Customs (HMRC) handle all tax issues in the UK. You will need to tell them as soon as possible that you are self-employed. Even if you already file a Self Assessment tax return for other reasons, they still need to be made aware so they can set up your tax records correctly. Registering online is straight forward and to begin with you will just need a few basic details of you and your business. They will then arrange for you to receive information and relevant documents with regards to Self Assessment, National Insurance contributions and PAYE if you already have employees. You will be set up with your own online account where you will need to file a tax return each year. This is something you can do yourself or ask an accountant to do. The important thing to remember is to keep records of all your transactions and not to throw away your receipts for any item or service which is relevant to the business. Keep your bank statements in an orderly fashion and you’ll have no problems filing a return.
As you will be self employed, you’ll need to pay your own National Insurance contributions. These are called Class 2 contributions and HMRC can arrange for you to pay them automatically through a direct debit so it’s one less thing to have to think about each month and makes it much easier to budget for. If you expect your earnings to be low, you can ask for a Class 2 National Insurance exemption certificate which means you are not liable for payment.
One aspect of having your own business is its name. You’ll be asked for this on your tax return so at the same time as you make the decision as to what you want to call your company; it is worth looking into registering it as a trademark. A trademark will protect you for the future and will ensure that nobody else can copy you. To do research into and for further information about trademark attorneys visit LondonIP where you will find everything you need to know.
Setting up in business is an incredible experience. Every day is a mixture of challenges and success, decisions and achievements. By organising your tax situation from day one, you will know that you can enjoy the thrill of the ride and know all your financial affairs are being looked after leaving you to enjoy the fruits of your work.