- You have to keep financial records for six years (including all receipts and expenditure, sales books, purchases books, cash book summaries, sales ledgers, wages books if you employ staff). If you do not keep these records and they are required by HMRC, you may be fined.
- You can keep records on paper or on the computer (make sure they're backed up).
- Employers need to keep PAYE records for the three years.
- Contractors in the Construction Industry Scheme need to keep records for the scheme for three years prior to the current one.
- You need to keep records relating to the registration of your company or formation of your business permanently.
- If you're self-employed and/or a sole trader (company directors are also sometimes asked) you pay your tax using a self-assessment tax return. You need to complete your tax return by 31st January.
- Limited companies pay corporation tax through a corporation tax return, and deadlines differ according to when you registered your company.
- If your turnover for the previous year was more than £70,000 (or you think your turnover for the ahead will be more) you need to register for VAT.
- You need to complete VAT returns (or you can join the VAT Flat Rate Accounting scheme).
- You need to keep VAT records for six years.
- Register as an employer with HMRC.
- Set up PAYE system to pay employees' wages, NICs and tax.
- Keep personnel records and PAYE records for three years.
- You deduct income tax and Class 1 NICs for employees who fall within state working age and earn above certain thresholds.
- Set up PAYE system to pay yourself and any staff.
- Pay tax through corporation tax returns.
- If you're self-employed, you need to pay Class 2 NICs (paid monthly or quarterly).
- You need to pay Class 4 NICs on top of Class 2 NICs if your profits are more than £5,715 (calculated as part of your tax return and payable at the end of the year).
- If you pay yourself through PAYE, you need to pay Class 1 NICs.
- You need to pay Class 1 NICs for employees.
Capital Gains Tax
- You need to pay Capital Gains Tax on the sale of any asset that has gained value since you bought it - such as shares, property (though not your home), goodwill, a business, plant and machinery.
- Capital gains tax is 18% for those earning less than £40,000 and 28% for those earning more than £40,000.
- If you are selling all or part of your business, you might qualify for Entrepreneurs' Relief, meaning you pay a discounted rate of CGT.
- You need to pay business rates on the property you operate out of, whether or not you own it.
- Business rates vary according to where you're located and the size of your business.
Importing and exporting
- If you are importing and exporting, you need to look into customs duty, excise duties and different VAT rates in different countries. These all vary according to type of goods and country.
- If you are a contractor working for only one client, you might be caught by the IR35 regulations that prevent tax avoidance. Make sure you follow these rules.
- If you are a contractor in the construction industry, you might qualify for the Construction Industry Scheme, which affects the way you pay tax.