How to set up and run a small business

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The area of tax for small businesses is not straightforward, in fact it can be a real minefield for the unwary. However if you take a little time, and work with your accountant, it’s usually possible to find ways to save some tax.

To help you think about ways you and your business could pay less tax, here are 10 tax-saving tips. They are designed to make you stop and think. Are you doing everything you can do to save tax? Is your advisor helping you to do so?
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When you buy certain new equipment, invest in buildings or research and development, you can deduct a proportion of the cost from your taxable profits and reduce your business tax bill, through Capital Allowances.

Capital Allowances take the place of commercial depreciation, which is not allowed for tax. Using them effectively can be a huge boost to your business, especially if you need to invest to fund growth.

Here’s a look at the main elements of the various capital allowances schemes and how your business can qualify to take advantage of them. Continue…

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Running your own business sometimes seems to be a series of successes followed by setbacks.

You win a big client, then lose an existing client. You hire the perfect employee and their current employer offers them more money to stay. You make a nice fat profit, and the taxman comes along and takes 20 per cent of it! Talk about three steps forward, two steps back.
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If you are a limited company shareholder, you may have to pay personal tax on any dividend income you receive. This article outlines how company dividends are taxed.
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If you need to submit a Self-Assessment Tax Return (SATR) it’s imperative you get it in on time and free of any mistakes.

There are penalties for not submitting your tax return on time and you may have to pay a fine if HMRC deem you have not taken enough care in completing it.

With regard to the deadlines, paper tax returns need to be filed with HMRC by 31 October and tax returns submitted online by 31 January. So, if you complete your tax return online, you get a few extra months.

This article explains how to get started with your tax return, and how to avoid common mistakes that people make on their self assessment tax return.
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Cash flow is arguably one of the most important parts of managing your small business. So any tax incentives, or potential tax relief opportunities which are available should always be grabbed with both hands.

But then, you often hear stories about how great these incentives and reliefs are, only to find that there are lots of conditions and qualifying factors, which mean you can’t actually benefit from them.

Thankfully, Research and Development tax relief isn’t like that. As long as you are genuinely investing in R&D projects, there’s a great opportunity to cut your corporation tax bill, or even get tax credits from HMRC in the form of an actual cheque!

So, what do you need to know about Research & Development Tax Relief Incentives? Continue…

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National Insurance is a deduction from earnings, set up originally to fund various State benefits such as the NHS, the State pension and other welfare-related schemes.

In reality, it is just another tax. In fact, as standard income tax rates have remained constant for many years, NI rates have soared.

In this guide we look at how National Insurance works, and what your National Insurance Contributions (NICs) will be as a small business person. The guide has been updated with the 2014/15 tax year NIC rates. Continue…

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In this concise guide, we look at the taxes you will encounter if you start your own business as a sole trader, and other things you should bear in mind before taking the plunge and becoming self employed.
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Small businesses, and the individuals who run them, are subject to a wide array of taxes – from Corporation Tax to National Insurance. Here is an overview of the main UK business taxes you will encounter as a business owner, together with links to our more in-depth guides.
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Following George Osborne’s delivery of the 2014 Budget, here is a summary of the main tax changes and announcements that will be of interest to those that own and run small businesses: Continue…

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As more and more people choose to work from home, the question of how you can reclaim any home office expenses is frequently asked.

The general HMRC rule for claiming tax relief on business expenses is that you can only reclaim costs that have been ‘wholly and exclusively’ incurred in connection with your trade.
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Tax isn’t the most exciting part of running your own business, but it is an issue that you will have to tackle at some point.

To help you to quickly get to grips with the subject, here are some handy tax tips based on our findings of working with small businesses over the past decade, and from our own personal experience at the ByteStart team.
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Large firms are set to enjoy another Corporation Tax cut following Budget 2013, but while the headline rate has been reduced significantly under the current Government, small companies will not benefit.
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The most talked-about small business announcement from Budget 2013 is the implementation of a new ‘Employment Allowance’, which will reduce firms’ Employers’ NI bills by up to £2,000 from April 2014.
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With the tax year end on the horizon once again, and significant changes to tax rates taking effect from April 2013, we examine how individuals can make the most of the currently available tax reliefs.
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Controversial changes to the Child Benefit regime went live on 7th January 2013. The benefit is no longer universal, and will be reduced when one parent earns over £50,000 per year, and scrapped entirely when earnings reach £60,000.
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From 7th January 2013, Child Benefit (CB) will be means tested for the first time. HMRC are sending out letters to taxpayers over the coming weeks. So, how will you be affected?
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As the tax year draws to an end, self employed people and limited company owners should consider their tax saving strategies, to ensure that they do not have to pay the highest rate of tax on their hard-earned income.
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Guide to Business Rates

February 19, 2012

Just as you have to pay council tax on your home, so your business must cough up business rates for its premises. They can be a pain and an easily overlooked cost when you are starting your business. In some circumstances, you may even have to pay business rates if you run a business from home.

This guide will help you understand what business rates you might have to pay, how to challenge the rates set, and even if you can claim any relief.
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The end of the 2011-12 tax year is fast approaching – 5 April 2012. In this article, we look at some of the issues that you may like to consider while there is still time to act.
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HMRC to reduce tax benefits available to shareholders of dissolved limited companies via (ESC) C16

December 20, 2011

HMRC has announced that it is to an impose a Capital Gains Tax ceiling on the amount of capital that can be distributed to shareholders when a limited company is wound up, before income tax is applied.

Tax reliefs available for the annual Christmas party

December 15, 2011

If you are organising a well-deserved works party this Christmas HFM Accountants have summarised the current tax reliefs available:

Guide to the main HMRC payroll forms for small businesses

October 17, 2011

When you run a small business, either as a sole trader, partnership or limited company, there will always be a number of HMRC forms you will need to be aware of. Although your accountant will typically take care of many of your form-filling duties, we have summarised what the most common forms are used for […]

Guide to the HMRC tax penalties regime

October 7, 2011

A new, tough, HMRC penalty regime came into play from 1st April 2009. Individuals and business owners can now face penalties of up to 100% for deliberately underpaying tax. The new HMRC penalty system has been drawn up to encourage people to take more care when submitting tax returns and other documents, as well as […]

Rewarding staff with bonus shares – Tax implications

October 7, 2011

Bonus payments may have been a bit thin on the ground this year. Hard pressed businesses, struggling to meet existing commitments, may balk at the prospect of parting with cash. However, the benefits of having a loyal and satisfied staff may prompt them to consider alternatives to the cash bonus.

What is Entrepreneurs’ Relief?

October 7, 2011

Following the creation of a new flat 18% CGT rate during Budget 2008, the Chancellor announced the introduction of entrepreneurs’ relief which was to compensate business owners who would have paid a lower rate under the previous taper relief rules on business disposals. The relief allowed business owners to pay an effective 10% capital gains […]

Annual Investment Allowance limit reduction from April 2012 – what should businesses do?

October 7, 2011

Businesses can currently write off 100% of the cost of acquiring qualifying assets against their taxable profits, up to an annual limit of £100,000. Assets that can be written off in this way include commercial vehicles, plant, computers and other equipment – cars do not qualify. George Osborne’s Emergency Budget of 22nd June 2010 gave […]

PAYE – Overview of Pay as You Earn scheme

October 6, 2011

In this article, we look at what the PAYE scheme is, and how it applies to the self employed, including limited company directors.

Self assessment – who needs to fill in a tax return form?

October 6, 2011

Most normal ‘employees’ have tax deducted at source via the PAYE system and are unlikely to have to fill in a tax return unless they receive other income. If you receive income which is not taxed at source, or have complex tax affairs, you do need to complete a tax return.

Self Assessment – prepare your paperwork in advance

October 6, 2011

Whether you’re filing your self assessment return online, or if you’re sticking with the paper return, you can save yourself a lot of hassle by getting prepared in advance.If you follow these tips, you’ll save yourself countless trips to your filing cabinet, and hopefully save a great deal of time.