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Are
you contemplating starting your own business? If so,
you'll know it's an exciting, yet daunting prospect.
That's where we come in - to ensure that every decision
you take is the right one for your business.
Getting
started
To
start with, we can help you prepare a full business
plan and establish sources of funds and tax-efficient
borrowing. We can also discuss with you whether your
business needs a PAYE scheme or should be VAT registered,
and, not least, assess the business structure that
will best meet your needs: sole trader/sole practitioner,
partnership or limited company.
Which
structure?
After
a consultation with you, we can provide advice about
which structure we believe is best suited to your
business. There are both advantages and disadvantages
for each structure with respect to control, perception
and costs. Another important consideration is selecting
the right year-end for your business.
Did
you know? If
you plan to become self-employed, failure to notify
the Inland Revenue within three months of the last
day of the month in which the self-employment begins
will result in a £100 penalty.
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 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.
Retaining
more profits - and saving some National Insurance
Although
leaving profits in your company can be tax efficient,
you need money to live on. We can explain the most
advantageous ways for you to extract profit from your
company. A salary may meet most of your needs, but
don't overlook the use of benefits in kind, which
may save you income tax and could also result in a
lower National Insurance bill.
Employed
or self-employed?
Should
you become self-employed or employed? There is no
statutory definition of employment or self-employment.
But there are a series of tests that the Inland Revenue
(IR) will apply if they believe someone has been incorrectly
classified.
The
IR35 rules require companies and partnerships to consider
each and every contract they enter into for the provision
of services. The question is whether or not the contract
is one which, had it been between the owner or partner
and the customer, would have required the customer
to treat the owner or partner as an employee and therefore
being subject to PAYE. The contract passes the test
if the owner/partner would have been classified as
self-employed; it fails if the owner/partner would
have been classified as an employee.
(article
date 03/2003)
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