Starting off in business for the first time? Here's a quick introduction to some of the taxes you may face.
Basic business tax
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Running a business means that you have to pay tax on your profit and how this tax is paid will depend upon the structure of your business. If you are a sole trader, also known as self-employed, you will pay your tax through self-assessment but if you set up a company you will pay corporation tax instead.
In addition to business tax, you will also pay national insurance contributions (NIC). Whether you are self-employed or run a business you will pay these contributions. If you are self-employed, you will be billed directly by HMRC and if you run a business you will pay national insurance contributions for your employees.
Other taxes to watch out for
There are other forms of business taxation which may or may not apply, depending on your circumstances. You may have to pay business rates if you have business property, either rented or owned. There are some ways to get relief on business rates, so it is worth investigating whether you are eligible.
Commercial property taxes
If you are purchasing a commercial property then you will also have to pay stamp duty land tax on this property and there are specific rates laid down for commercial property. You can reduce these liabilities by separating out all items included in the purchase price, such as equipment or furniture as this could push the price down into a different stamp duty bracket.
Value Added Tax
VAT is another business tax that will affect you once your turnover reaches the threshold. Alternatively, if you operate in a sector where the companies you work with are all VAT registered, it may be beneficial to register anyway, regardless of the threshold as this means you can claim VAT back on any business purchases.
Get the best advice
An accountant, like Berley's, can offer you advice on how best to reduce your tax liabilities, and you can help them by keeping good records of your expenditure, mileage and other business expenses. This means that all of your allowable businesses expenses can be deducted from your profit and this will reduce your liability.
Contact Berley Chartered Accountants London Office
If you want to know more about business taxation and how we can help you to tax plan, call us now on 020 7788 8261, email us on firstname.lastname@example.org or complete our Free Online Enquiry and we’ll be in touch as soon as possible.