Getting your finances into clear view and understanding exactly what taxes you are liable to pay, how much they will be and how that affects your overall tax position and financial outlook is crucial.
Any business that is trading to make a profit is required to pay business tax. If you are self-employed you can make HMRC aware of your accounts through a self-assessment; for new companies look for corporation tax. Any capital gains made by your start-up company could also be taxed.
Take the time to research your industry and the amount of business tax applicable to you. There are companies that can offer business start-up packages; helping you understand the complexities of the tax system and exactly what you are required to pay, and equally, what you are entitled to reclaim or gain exemption from.
Learn about NI and Contributions
One tax you have to be fully aware of is National Insurance Contributions. These are sometimes paid by both employer and employee with a number of different classes of contribution to be aware of depending on how much you earn and what type of contract you have.
There are a number of ways in which you can minimise your NI contributions. Speak to your financial advisor to discuss your options.
The tax position of your business will be seriously affected by VAT. Businesses that are not VAT registered cannot reclaim VAT payments on purchases made. This becomes another business tax that you have to take into consideration.
Other Types of Business Tax
Away from immediate business taxes you should consider the rest of your financial landscape and what else you could be taxed on. Other forms of business tax include stamp duty land tax on any commercial premises you may own as well as business rates that are specific to industry or relate to government conditions such as environmental taxes.
Plan for the Future
Minimising the impact that tax can have on a new business can be crucial in allowing a smooth development at a stage where ideas are still formulating and your customer, service, product and brand are still in a relatively fragile state. If a mistake is made at this stage it can have a devastating impact on the business as a whole.
There are a number of ways in which your business can gain tax relief. Business start-up packages can include advice and information about all types of tax relief and exemptions that can help you manage your tax and long term finances, putting you in a better position to grow steadily.
Take the time to read through our guides for start-up businesses. There is plenty of advice and help available so don’t be frightened to take the plunge.
Our Free Download section is also full of templates which will help you get started.