It is the ambition of many people to run their own business. In recent years, this dream has become a reality for some who have been made redundant, whilst others may decide to start up in business to be more independent and to obtain the full financial reward for their efforts. Whatever the reason for [...]

One of the first major decisions you will have to make as you start your new business is the form of legal entity it will take. To a large degree, this decision may be dictated by the way you have organised your operations and whether you intend to work on your own or in conjunction [...]

A sole proprietorship is typically a business owned and operated by one individual. A sole proprietorship is not considered to be a separate legal entity under the law, but rather is an extension of the individual who owns it. The owner has possession of the business assets and is directly responsible for the debts and [...]

In a partnership, two or more individuals join together to run the business enterprise. Each of the individual partners has ownership of partnership assets and responsibility for liabilities, as well as authority in running the business. The authority of the partners, and the way in which profits or losses are to be shared, can be [...]

The Limited Liability Partnership ("LLP") offers limited liability to its members but, like a traditional partnership, is tax transparent and offers flexibility in terms of its internal organisation. An LLP is a separate legal entity from its members. Therefore, it may enter into contracts and deeds, sue and be sued and grant floating charges over [...]

A limited company is a separate legal entity that exists under the authority granted by statute. A limited company has substantially all of the legal rights of an individual and is responsible for its own debts. It must also file tax returns and pay taxes on income it derives from its operations. Typically, the owners [...]

You must give HM Revenue and Customs (HMRC) specific information about your company within 3 months of starting up in business. You may get a penalty if you don’t. You can do this online once you have got your company’s Unique Taxpayer Reference (UTR): https://www.gov.uk/limited-company-formation/set-up-your-company-for-corporation-tax HMRC will use this information to work out when your [...]

A significant task for the new business owner is ensuring that the business is properly complying with the extensive tax and information filing requirements imposed by the various authorities. Problems and penalties could arise if the new business is not registered with the appropriate tax authorities in a timely fashion. While this chapter is not [...]

Depending on the level of profit, sole traders and partners have a liability to Class 2 NIC at a weekly level of £3.05 (where annual earnings are £6,475 or more for 2020/21). These contributions are collected with income tax and Class 4 national insurance. Go Back

You need to consider if it is beneficial to be VAT registered from the outset. The pros and cons are discussed in Chapter 4. If you are registering for VAT, form VAT 1 needs completing, and if you are a partnership, form VAT 2 needs to be completed giving details of all the partners. Information [...]