When running a company, you may be most concerned with turning a profit or developing your capital, depending on the nature of your business and your priorities. Naturally, there will be taxes to pay and these will be based on both the income and capital elements of your business. How much tax you will pay will be calculated on your income less any day-to-day running costs, and on your capital less any capital expenditure.
When you set up your own limited company, one of the most important things to consider if you also have employees is to set up your company’s payroll.
You may have considered purchasing a car via your own limited company. However, before you go ahead, you should consider the tax implications of using a company car for your own personal use, compared to the option of simply claiming back mileage costs of using your own car whilst on business.
Every year in the UK, all registered companies must prepare annual accounts and file them with Companies House and HMRC. Businesses must accurately report on their financial activity during the tax year just gone.
Originally, the National Insurance scheme was set up to pay for the then newly established NHS and other state benefits after the second world war as part of the establishment of the welfare state. Workers would pay a percentage of their income so that people who could not work due to age, infirmity or ill health could still have money to live on.
Traditional employees have income tax deducted before they get paid by their employer. The Self Assessment system is in place to collect income tax from individuals who have earnings which can’t be taxed in this way – such as the self-employed and company directors.
You may decide to set up a business with one or more other self-employed individuals. Here, we look at how you can form a partnership, how your new joint venture will be taxed, and how to protect the partners in case things go wrong.