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| If,
like more and more people today, one of your goals in 2004
is to set up your own business, you’ll know that this
is an exciting, yet daunting prospect. The owner-manager needs
to be totally focused and determined, and possess drive, energy
and, most importantly, enthusiasm. That having been said,
it is also vital to implement the right business structure. |
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Getting
started
To start with, you will need to prepare a full business plan and
establish sources of funds and tax-efficient borrowing if they are
required. Will your new venture need a PAYE scheme if you intend
to employ staff, including yourself? Should you be VAT registered?
Not least, what is the most appropriate business structure that
will best meet your needs: sole trader/sole practitioner, partnership
or limited company?
Another important consideration is selecting the right year-end
for your business. Professional advice is crucial at this stage
of your business.
In the know!
* Expenses It is essential to ensure that
you claim all deductible expenses.
* Capital allowances For expenditure on
plant and machinery, tax relief is given in the form of capital
allowances.
* Research and development All companies can obtain
a 100% capital allowance on capital expenditure on research and
development. Small and medium-sized companies can obtain 150% tax
relief for revenue expenditure on research and development in certain
circumstances, and large companies 125%.
* Involving the family If you intend to employ family
members in your business, you will need to be able to justify the
amount you pay them. You can remunerate family members with a salary,
and perhaps also with benefits such as a company car or medical
insurance - and you could also make payments into an appropriate
pension scheme
Incorporated business benefits
Forming a limited company can make sense when the limitation of
liability is important. Trading through a limited company can also
be an effective way of sheltering profits from immediate personal
tax, as profits paid out in the form of salaries, bonuses or dividends
will normally be taxable at an individual’s top rate, whereas
profits retained within the company can be taxed at a rate as low
as 0 per cent.
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| It
is important at the start of your new business venture that
you have the right strategy in place for your business to
grow, so as to realise your vision. Professional advice should
be sought as early as is practical |
The
Financial Services Authority does not regulate tax advice.
Article date 03/04 |
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