How to set up and run a small business

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If you are having problems paying HMRC your business taxes, you may be able to agree a Time to Pay arrangement so you can pay the tax over a longer period of time.

In this concise guide, we walk you through HMRC’s Time to Pay Arrangements, explain what you should understand before contacting HMRC, and share some practical tips on how to make the most of Time to Pay;

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To help small business owners and company directors stay up to date with all the various tax rates, thresholds and allowances that might be needed for tax calculations, here is ByteStart’s summary of the main tax rates, tax bands, and tax allowances for the tax year from 6 April 2015 to 5 April 2016.
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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, we’ve asked Simon Cox of Forbes Watson Accountants to share 10 of the best ways small business owners can look to pay less tax. 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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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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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 NIC rates for the 2016/17 tax year. Continue…

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What is Corporation Tax?

April 6, 2016

When you set up a limited company, your annual profits will be subject to Corporation Tax.

Dealing with your corporation tax issues is one of your accountant’s key tasks. However, it is ultimately the company directors who are responsible for ensuring that a company’s tax affairs are in order.

As a director of a limited company, you therefore need to make sure that your company’s corporation tax liability is accurate, your corporation tax return (form CT600) is filed with HMRC on time, and that you pay the corporation tax to HMRC when it falls due.

If you are setting up a limited company for the first time, here is a handy overview of how to comply with the corporation tax rules for UK companies.
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At 1.30pm on Wednesday 16 March, 2016, George Osborne delivered his eighth Budget as Chancellor of the Exchequer.

The overall headlines include the introduction of a sugar tax on soft drinks from 2017, extra funding for schools to have longer days and a downward revision of growth forecasts for the UK, but what did Budget 2016 bring for small businesses?

Here are the main points that affect business owners, both self-employed and limited company directors; Continue…

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From 6 April 2016, the way dividend income is taxed will change significantly. The changes will affect hundreds of thousands of small business owners, many of whom will see a big jump in the amount of tax they will have to pay.

At present, company dividends are treated as ‘tax paid’ in the hands of shareholders. However, from April 2016 the tax treatment of dividends will be altered dramatically, and as you can imagine, this isn’t going to result in limited company directors paying less tax! Continue…

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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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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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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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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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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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Business owners urged to make most of tax reliefs before year end

March 11, 2013

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.

Are you affected by the new Child Benefit rules?

January 7, 2013

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.

Child benefit shake-up – will you be affected?

October 30, 2012

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?

Who will pay the highest rate of income tax in 2011-12?

March 1, 2012

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.

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 […]

Tax planning opportunities for business owners prior to 5th April 2012

February 2, 2012

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.

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 […]