I am starting my own business as a self-employed, what should I do now?
If you want to start working as self-employed, you must register with HM Revenue & Customs, but first make sure you have a National Insurance Number. After the registration, you will receive your Unique Taxpayer Reference (UTR) and HMRC will set up the right tax and National Insurance contributions records. You should keep your UTR safe as you will need it when completing your Self Assessment tax return.
Can I register for VAT if my turnover is below the threshold ?
If you are doing business in the UK but your turnover is below the threshold for registration, you may register for VAT voluntarily. Remember to regularly check if your turnover has exceeded the threshold and you need to register.
How voluntary VAT registration could benefit your business ?
You may find it beneficial to be able to charge VAT on your sales and claim back VAT on your purchases in various ways. By way of example, if there is a zero VAT rate for the items you sell but you buy standard-rated items, HMRC will give you a VAT refund. Note that if you voluntarily register for VAT, you have the same rights but also responsibilities as in the case of compulsory registration.
I am still not clear whether I am employed or self-employed ?
This depends upon what your contract says or what your working arrangements are. You can be employed and self-employed at the same time. When defining your employment status, you should refer to the following questions:
A self-employed person:
•Runs own business and decides about the type and time of its work
•Bears responsibility for the success or failure of the business
•Have more than one customer at the same time
•Can hire people
•Takes care of the main equipment needed to perform business activities
An employed person:
•Has to perform the tasks imposed on their own
•Is told how, where and when to do your work
•Works within fixed hours
•Work for just one person at a time
•Is not in charge of the business nor takes responsibility for it, that is the employer’s task
•Is paid a regular wage or salary
Who need to register for VAT?
You may need to register for VAT if you are doing business in the UK as an individual, a partnership, a company, an association, a charity, a local authority or any other organisation or group of people acting together under a specific name.
You must register for VAT if:
1. Your VAT taxable turnover is more than £85,000 (the ‘threshold’) in a 12 month period
2. you receive goods in the UK from the EU worth more than £85,000
3. you expect to go over the threshold in a single 30 day period
There’s no threshold if neither you nor your business is based in the UK. You must register as soon as you supply any goods and services to the UK (or if you expect to in the next 30 days).
Note that you cannot register for VAT if you sell only goods or services that are exempt from VAT or you are not in business according to the HMRC’s definition.
What is a Company Tax Return?
If your company or organisation is liable for Corporation Tax you’ll have to complete and file a Company Tax Return for each accounting period. You generally must file a return even if your company or organisation hasn’t made any taxable profits.
A Company Tax Return includes:
1. your return form - including your self assessment of Corporation Tax payable and signed declaration
2. any return supplementary pages as appropriate
3. your company or organisation’s accounts (known as ‘statutory accounts’), tax computations and any other appropriate information or documentation
What is capital gains tax?
Capital Gains Tax is a tax you pay when you make a profit by way of selling assets (e.g. shares or property). Your Capital Gains Tax may be reduced by a tax-free allowance and some additional reliefs. There are also some circumstances under which no capital gain tax has to be paid.
Do I have to manage my finances personally or can an accountant to do it for me?
In most cases you do not have to manage your finances on your own. You may authorise an accountant to act for you. In fact, some entrepreneurs find it too complicated or time-consuming to deal with financial matters by themselves. You can avoid many misunderstandings or mistakes if you authorise an accountant to do it for you. HMRC requires a special form for this purpose. Note that you are still responsible for your own tax affairs at all times.
How to start an online business?
How to close down my own business?
If you need to close your business you should plan it carefully. First of all, it is important that you inform HMRC of your intent. Only then will you be able to settle matters related to tax and National Insurance. In some circumstances it is possible to extend the deadlines for payments or even to claim back some tax or National Insurance.
How can I inform HMRC that I want to close my business?
1. Self-employed and business partners should complete an online form.
2. Shareholders may still have to file Company Tax Returns and pay Corporation Tax while closing the business. You will need to account for any capital gains made in the closing process through your Company Tax Return.
3. Employers must also submit a final Full Payment Submission (FPS) when running their final payroll, in addition to the standard procedure. It is important that you pay all outstanding PAYE tax and National Insurance deductions on a timely basis.
4. VAT-registered businesses will need to deregister from VAT.