Here we’ll examine the legal, accounting and tax requirements and how this affects you and your business compliance needs.
The law determines the outlines of how you can trade as a business and that you meet the correct compliance standards. Getting this right early in your business strategy ensures good practice and controls, preventing problems further down the line.
The main steps are highlighted below and we look at why they are so important to the progress and smooth running of your business.
The legal structure of your business.
The first decision is to decide on the legal structure of the company. The 2 key choices are a Limited Company (incorporation) or sole trader / partnership (unincorporated). The main differences revolve around liability, and whether you wish the Company and yourself to be treated as separate entities. We will investigate the best way for your personal circumstances and advise which is the best. Future proofing is part of this process as well as the industry you are in. There are certain financial benefits to each structure which will also form part of our recommendations.
Open a Business Bank Account
While it may seem an unnecessary burden in the short term, getting to grips with the separation of the business from your personal life is fundamental to developing a successful mindset. Payments and receipts for your business can be tracked far easier with separate accounts. This will keep your bookkeeping costs to a minimum, ensure allocation accuracy and give you faster insights into the financial status of your business. Banks are often changing their offers to customers, so it pays to examine each service regularly to ensure the best opportunities.
Set up a bookkeeping and accounting system
Your Business Compliance needs suggest that you must keep adequate records and submit annual statutory accounts. In order to achieve these minimum legal standards we will support you in getting the most appropriate systems in place. Good implementation and systemisation are key to any successful business; they give you a firm base to work from and ensure results are up to date and accurate. We can, of course, structure an accountability process and monthly or quarterly reviews to ensure you are always in touch with your business financial affairs.
With the Government pushing for complete digitisation of the tax system, we are able to support you with Xero accounting software, and we also have other very simple to use financial programs enabling you to start quickly with keeping track of your finances. Before agreeing terms with software providers, we strongly recommend a short chat with us to ensure that you’ll be using the most appropriate software for your circumstances.
Register for the relevant business taxes
One of the three certainties in life, Taxation. It is mandatory for your business to register with the necessary tax systems. Allowances will need to be made within the company’s finances for these taxes to be paid at the correct time. Our systems ensure that the correct amounts and reminders are in place to support you in the timely payments of these.
If the chosen business structure is the Limited Company route, you must register for Corporation Tax. It’s a fairly simple process, and the amounts payable are worked out as a percentage of your year end profits once allowances and other reliefs have been taken into consideration. Again, we will be heavily involved with you in determining the amount and dates for the taxes due. Ensuring understanding and systems for having the correct finances in place is good practice.
The business may need to register for other taxes, including:
Self-assessment business tax Alongside corporation tax on the company’s profits, directors are also taxed on their personal earnings. Sole traders are also taxed on the business profits in this way, because business and personal income are treated as the same thing.
VAT You may need to register for VAT depending on your rolling one-year turnover. You may also choose to register voluntarily, and we will help you make the best choice for your personal circumstances. As an unpaid tax collector you may be responsible for collecting this tax and passing it through to HMRC on a quarterly basis.
PAYE Correct payroll systems for any employees is crucial, and that includes declaring and paying the correct amount of employers National Insurance and the employees tax deductions to HMRC. We can arrange to provide the expertise, ensuring the amounts to pay are available at the correct time.
For a complimentary Discovery Call to discuss the most appropriate level of support, a personalised quote and a guarantee of our best possible service, please complete the form below and one of our senior advisors will contact you. Or if you prefer, please call 01296 681341 for our Wingrave Bucks Accountants office.