For Immediate Release
Expert Guidance for New Entrepreneurs
As the UK economy recovers from the Covid19 pandemic, many people have been inspired to start a new business as a result of employment changes resulting from the pandemic. But while those planning start-ups tend to focus on products, pricing, and marketing for their new ventures, often forgotten is the financial aspect of business tax such as what taxes business owners will be liable for and how they will have to pay. David Redfern, tax preparation expert and director ofDSR Tax Refunds Ltd, offers his guidance to business beginners.
Business taxes for any business venture will be determined by the way the company is structured. Those businesses based around a sole trader or partnership will need to account and pay tax via the Self Assessment scheme whilst those entrepreneurs who form a limited company will need to register and pay Corporation Tax. Redfern stated, "The very first decision to make when looking at accounting for your new business is how you will structure that business. If you are a sole trader or form a business partnership, you may decide that using Self Assessment is the simplest and easiest way to account for and pay your taxes - you simply need to register for Self Assessment and then complete your tax return in time for the 31st January deadline. You can even use simple cash basis accounting, which for some forms of business may be the best option. However, forming a limited company can have advantages for would-be entrepreneurs, in terms of personal liability if the business fails, as well as paying your tax liability via Corporation Tax, but this option is far more complex in terms of accounting and you will need to file a set of company accounts with Companies House as well as filing a Corporation Tax return with HMRC". Entrepreneurs who prefer the limited company option will need to register the company and director details with Companies House.
Depending on how the business is structured will determine how to account for a business' tax liability. Sole traders and business partnerships will need to submit a Self Assessment tax return by 31st January following the end of each tax year, detailing their income and business expenses. HMRC then calculates how much tax and National Insurance is owed and issues a tax bill. Business partners will be required to submit individual tax returns for each partner as well as one which relates to the business partnership. However, Corporation Tax differs significantly from Self Assessment. Redfern explained, "Corporation Tax is paid on profits made by the company and the timing of any tax requirements is based on the accounting period of the business in question unlike Self Assessment, which has fixed deadlines under which to register and file tax returns. If your business has an accounting year which runs from 1st July to the following 30th June, that will also be the period for which you will need to account for and pay any due Corporation Tax. A significant difference for Corporation Tax is that the company needs to calculate their own tax bill based on their company tax return." Corporation Tax will be due 9 months and one day after the end of the company's accounting period.
Business profit will be determined by the amount of income made by the business minus any business expenses. Expenses incurred by the business should be deducted before tax liability is calculated. Redfern stated "Ensuring that all legitimate business expenses are accounted for can make all the difference for a fledgling business because unaccounted expenses will eat into profit margins. Legitimate business expenses will include not only the expenses directly involved in the running of the business, such as premises, staff and stock, but also those indirect expenses such as accounting fees, insurance, advertising costs and so on - making sure all of these are included in your tax return will make your business far more profitable". Business expenses must be solely related to the business - no personal expenses can be included as tax relief.
Contractors, especially those working within the construction industry, who require guidance and assistance with their allowable business expenses, are encouraged to contact DSR Tax Returns Ltd on 0115 795 0232 or via their website for help with their tax returns.
About DSR Tax Refunds Ltd
DSR Tax Refunds Ltd is a firm of tax preparation experts who specialise in CIS tax returns for construction workers working within the Construction Industry Scheme (CIS) as well as employees who are eligible to claim a tax refund for their work-related expenses, including employees working from home as a result of the Covid19 pandemic. Their friendly and helpful team can help with all relevant paperwork to ensure clients claims are handled in an accurate and efficient manner.
For more about DSR Tax Refunds Ltd, visit https://tax-refunds.co.uk/
For media enquiries, please email info@tax-refunds.co.uk or call 0115 795 0232
DSR Tax Refunds Ltd
Registered Office: Ground Floor, Seven Mile House, 1 Mansfield Road, Papplewick, Nottingham, NG15 8FJ