Start Your Own Business

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Start your own business - overview with useful tips and tax advantage comparison betwiin sole trader and limited company

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Start Your Own Business

  1. 1. Start your own business <br />Omnipol Accounting Ltd <br />Accountants, Tax and Business Advisers<br />
  2. 2. What will you know?<br /><ul><li>How to set up a business
  3. 3. Business Plan
  4. 4. Record Keeping
  5. 5. Business Advice
  6. 6. Tax Rules
  7. 7. Income Tax / Corporation Tax
  8. 8. PAYE
  9. 9. Questions</li></li></ul><li>What will you know?<br />Useful tips<br /><ul><li>Sales Records
  10. 10. Budget
  11. 11. Marketing
  12. 12. Internet
  13. 13. IT</li></ul>Summary<br />
  14. 14. Self – employed or limited?<br /><ul><li>Limited Company
  15. 15. Sole Trader
  16. 16. Partnership
  17. 17. Limited Liability Partnership</li></li></ul><li>Business Plan<br />- Balance Sheet<br />- Profit and Loss account<br />- Cash Flow<br />- Competitor Analysis – SWOT<br />- Market intelligence<br />
  18. 18. Taxes<br /><ul><li>VAT (Value Added Tax)
  19. 19. PAYE (Pay As You Earn)
  20. 20. Corporation Tax
  21. 21. Income Tax
  22. 22. Construction Industry Scheme</li></li></ul><li>VAT – Value Added Tax<br />If your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £73,000, or you expect it to go over that figure in the next 30 days alone, you must register for VAT. However, if your turnover has gone over the registration threshold temporarily then you may be able to apply for exception from registration.<br />B. There are currently three rates of VAT:<br /><ul><li>standard rate - currently 20 per cent
  23. 23. reduced rate - currently 5 per cent
  24. 24. zero rate - this is not the same as exempt or outside the scope of VAT</li></li></ul><li>PAYE – Pay as You Earn<br />PAYE (Pay As You Earn) is the system that HM Revenue & Customs (HMRC) uses to collect Income Tax and National Insurance contributions (NICs) from employees' pay as they earn it. The term 'employee' includes directors of limited companies.<br />Tax year runs form 06 April until 05 April the following year<br />All employees must have a tax code i.e. 747L<br />
  25. 25. PAYE – contd.<br />D. You'll have to give each of your employees a pay statement - or payslip - at or before the time that you pay them. This can be in either paper or electronic format but it must show certain items, including each employee's gross pay (before any deductions are made), all deductions and the purposes for which they are made, and the net amount payable after the deductions have been made (also known as take home pay). If you don't give your employees an itemised payslip they could complain to an employment tribunal.<br />E. Form P35 - You list details of all your employees on form P35 and the amount of Income Tax and NICs you've deducted from each of them. Your P35 must reach HMRC no later than 19 May and almost all employers are required to file it online. <br />
  26. 26. Payslip<br />
  27. 27. PAYE – contd.<br />F. Form P60 - You'll need to issue a form P60 to each employee who was working for you at 5 April whose earnings reached the National Insurance Lower Earnings Limit during the tax year. The P60 shows the employee's pay and tax for the whole year. This can be in either paper or electronic format and must be given to the employee before 1 June following the end of the tax year.<br />G. Form P45 - New employees who've had a previous job, or have had a period on state benefits, will give you a P45 when they start. When they leave you give them a completed P45 for their new employer.<br />H. Employers' secondary Class 1 rate above secondary threshold (£136) sits currently at 13.8%<br />
  28. 28. PAYE – contd.<br />Employees pay also NI contributions<br />J. PAYE payments must reach the Revenue by the 19th of the following month<br />K. Employer must pay Statutory Sick Pay (SSP)and Statutory Maternity Pay (SMP)<br />
  29. 29. Corporation Tax<br />A. Corporation TaxCorporation Tax is a tax on the taxable profits of limited companies and some organisations including clubs, societies, associations, co-operatives, charities and other unincorporated bodies. The rate is currently 20% for profits up to £300.000<br />B. The Company must file Annual Accounts with HMRC and Companies House together with Company Tax Calculation / Tax Return (CT600)<br />
  30. 30. Self – Employed – Income Tax<br />All self-employed persons must file Tax Return every year.<br />Tax is payable in two instalments (31 Jan and 31 July)<br />Class 2 National Insurance - how much you pay<br /> You pay Class 2 National Insurance contributions at a flat rate of £2.50 a week. However, if your earnings are below £5,315 per year (2011-12) you might not need to pay. <br />D. Class 4 National Insurance - how much you pay<br /> The amount of Class 4 National Insurance contributions you have to pay for any tax year is based on your profits for that year. You pay 9 per cent on annual profits between £7,225 and £42,475 (2011-12) and 2 per cent on any profit over that amount. <br />E. If you are self –employed you must calculate your taxable profit<br />
  31. 31. Income Tax Rates <br />
  32. 32. Which to choose?<br />
  33. 33. Record Keeping<br /><ul><li>Sales Records
  34. 34. Purchase Records
  35. 35. Bank Statements
  36. 36. Agreements with clients, suppliers, banks, etc.
  37. 37. Employees’ Time Sheets</li></li></ul><li>Record Keeping contd.<br /><ul><li>Payroll
  38. 38. VAT Returns
  39. 39. Other documents, i.eCIS, P11
  40. 40. Mileage Record</li></li></ul><li>Sample Invoice<br />
  41. 41. Mileage Record<br />
  42. 42. Useful Links<br />HMRC<br />www.hmrc.gov.uk<br />Companies House www.companieshouse.gov.uk<br />Business Link <br />www.businesslink.gov.uk<br />Omnipol Accounting Ltd<br />www.omnipol.co.uk<br />
  43. 43. How we can help?<br />Our work is dedicated to the prosperity of our Clients. We specialise in medium size business sector and start-up business. You will receive a comprehensive service, from forming a limited company or self employment registration, through business advice, to final accounts and returns preparation. You can rest assured that Your business will flourish.<br />Today we help clients minimize taxes, accumulate wealth and plan for their retirement and estates. Practical experience in both accounting and tax compliance offers You a two-fold advantage; Consulting Services help You successfully operate and expand Your business, while high-level tax Advisory Services help minimize taxes to retain profits. <br />More importantly, we want You to view us as more than an accountancy firm, but as a trusted partner who will be Your friend for life.<br />
  44. 44. Get in touch :<br />Pawel Janicki MAAT<br />t. 02380638 503<br />f. 02381 789 464<br />m. 07878 288 050<br />e. tax@omnipol.co.uk<br />
  45. 45. Many thanks!<br />PROFESSIONAL – AFFORDABLE – ON TIME<br />Get in touch – we will Untax Your Taxes! <br />Many people are afraid of asking an accountant to help with their new business. They think they will be charged a fortune for every phone call, and every piece of advice. It really doesn’t have to be that way. <br />For new start-ups, we offer a Free consultation to help You ensure:<br /><ul><li>You are legal in the eyes of the Inland Revenue.
  46. 46. You have chosen the best company structure for Your business
  47. 47. You are keeping necessary records.
  48. 48. You are aware of how to go about declaring Your earnings and when Your taxes are due.
  49. 49. Help with any other accounting or tax issues You may have.</li>

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