Sole Traders 

You must register with HMRC as self employed within three months of starting your business.

Keep business records showing all the income and expenditure.

Complete an annual self assessment return to HMRC for each 5th April.

Tax and National Insurance is payable on your profits, taxed as income tax and Class 4 NIC.

You must also register to pay Class 2 NIC which is currently a fixed rate of £2.50 per week.

When your turnover reaches £70,000 p.a. then you must register for VAT.

Before employing staff the business must register with HMRC for a PAYE scheme so that it is able to deduct tax and national insurance from employees pay.

Partnerships 

Each partner is responsible for registering with the revenue just as a sole trader would with each partner having the same obligations as that of a sole trade.

The partnership also needs to complete an annual partnership tax return to HMRC for each 5th April.

Limited Companies

Contact HMRC to inform them of the new company.

Keep business records showing all the income and expenditure.

File an annual Corporation Tax Return with HMRC each year.

Tax is payable on the business profits this is known as Corporation tax.

Directors and employees of the company are subject to PAYE so the company must register for a PAYE scheme from the start.

When the company turnover reaches £70,000 p.a. you must register for VAT.

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