Blog Categories

 

Let's Get Connected!

 01626 833828

facebook-icon  twitter-icon  linkedin-icon  email-us-icon

Friday, 12 December 2014 11:18

Tax tips for startups

Rate this item
(0 votes)

Starting your own business is an incredibly exciting time but it can also be equally scary. There’s so much to think about, to plan and to do – all at the same time! Juggling building a business and maintaining a personal life can be difficult even before you start trading so here are our top 3 tax tips for startups.

1. Keep a record of your pre-trading expenses

Once you start trading, you can go as far back as seven years and claim tax deductions on the cost of any expenses you’ve incurred in relation to your business – as long as they’re exclusively for the purpose of the business. The types of costs you may incur before you start trading include but are not limited to: research and development, travel, office supplies and insurance.

2. Pick the right legal structure for you

Sole traders are taxed on profits as they are made above the tax free personal allowance. Shareholders, however, only pay tax when they extract funds from the company either as salary or dividends. This means that they can better manage their tax position but the company will pay tax on all of its profits.

Whilst the potential tax implications may have an influence when deciding whether to be a sole trader or a limited company, there are numerous other factors to consider.

In certain situations, setting up as a sole trader is a simpler option as it does not involve the same amount of administration as running a limited company.

However, if you’re anticipating high growth from the off or long term investment and funding will be required then starting out as a limited company may be the way to go.

Do not let your expected net profit before tax and any potential savings be your only driver when making this decision.

3. Time your year-end to suit your business

The date you choose as your year-end will affect when you have to pay tax on your profits. Aligning your year-end with the tax year may be the simplest option but there are many implications for a growing business that you should consider.

For limited companies, an initial accounting date will automatically default to the end of the month 12 months after the date of incorporation. This date will determine when the payment of your corporation tax is due. You should be aware of this date so that you can ensure you have sufficient funds to pay your tax bill when it’s due.

For sole traders and partnerships, careful planning of your year-end date can influence when tax on your profits becomes due. This means that you will have longer to make sure that you have enough cash in the bank to cover your tax bill.

It is also worth considering when you expect to be busiest as finalising your year-end accounts can be time consuming so choosing a date when you’ll be less busy may be advantageous.

When you are planning your tax scenario, it is important to seek the advice of a professional who can talk you through potential tax liabilities and advise you on the best course for yourself and your business. Please do not hesitate to get in touch if you would like some advice on any tax matters.

 

Disclaimer

The information contained in this Blog is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. Given the changing nature of laws, rules and regulations, and the inherent hazards of electronic communication, there may be delays, omissions or inaccuracies in information contained in this Blog. Accordingly, the information on this Blog is provided with the understanding that the authors and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice or services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser.

While we have made every attempt to ensure that the information contained in this Blog has been obtained from reliable sources, One Plus One Ltd is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this Blog is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Nothing herein shall to any extent substitute for the independent investigations and the sound technical and business judgment of the reader. In no event will One Plus One Ltd, or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this Blog or for any consequential, special or similar damages, even if advised of the possibility of such damages.

Read 1231 times Last modified on Wednesday, 05 October 2016 16:31

what our clients say

  • One Plus One Accountants have been an invaluable support to me and my business. Simon guided me right from the beginning when I was still deciding whether to set up as a Sole Trader or limited company. I have had support with incorporation of the business, payroll for our first employee, VAT... Read more >>
    Hummingbird HR Ltd

  • We have enjoyed the services of One Plus One Accountants since taking over our business 10 years ago. We were recommended to use them and have been impressed with the knowledge and expertise of all staff. The staff have the ability to explain complex tax and employment issues in a language that is... Read more >>
    Meadfoot Beach Café

  • Since working with One Plus One Accountants we have been more than satisfied with the quality of service we have received. The staff are always very pleasant and helpful. We would have no hesitation in recommending them to others.... Read more >>
    Shirley and John Eatwell

  • A few words about One Plus One. I have enjoyed the excellent advice I have got. It has enabled me to feel my best tax position has been obtained with the least effort from myself. I would recommend them to anyone for the best possible result. All the staff are most helpful and knowledgeable.... Read more >>
    David Punter

  • One Plus One Accountants have proved themselves time and time again over the last 2 years and have helped us to strengthen the control of our company. The staff are friendly, reliable and continually give a good professional service, whilst maintaining very competitive charges. We do not hesitate... Read more >>
    Nevada Construction Ltd

  • Since working with One Plus One Accountants we have found them efficient and kept our accounts in good order for the last 30 plus years. We have been impressed with their services and find them approachable at all times including regular impromptu meetings to discuss our business in a friendly and... Read more >>
    J Melhuish, Teignbridge 76 Social Club

  • My company has had the great pleasure of working alongside One Plus One Accountants for the last 12 years. They have as a team over the years assisted us with many different business issues, their advice & knowledge has helped me to understand how a business works and how to grow from a one man... Read more >>
    Katherine Bainbridge, R B Engineering

  • Through our association with One Plus One, we have found the staff friendly, knowledgeable, efficient, helpful and very responsive to any problems, and we can all have them. Long may it continue.
    Thank you and wish you all the very best for the future.... Read more >>
    Pat Newport, Motoplan Ltd

  • Changing our accountant was not the easiest decision to make but making the move to One Plus One has proved to be a great decision.
    You would not always expect to find professional efficiency hand in hand with friendliness and approachability but that is exactly what we found.
    We are... Read more >>
    Louise, Tackle Trader

  • As a busy award winning group of hair salons we need to be able to rely on good sound advice, prompt attention and expert handling of our financial affairs as we simply do not have time! One Plus One Accountants have now looked after us here at CRC for some 14 years providing a first class,... Read more >>
    Karen Dodds, Cutting Room Creative

  • I have been a customer of ‘One Plus One Accountants’ in its different guises for over 25 years, and have always received an excellent service from a locally based firm. With the formation of our new company a year ago, we needed the stability and confidence that ‘One Plus One’ gives us. We... Read more >>
    Nick Yabsley, RPM Renewable Energy Ltd

  • I moved my accounts two years ago from a well know accountant practice in Exeter after being charged such high fees for what I considered a relatively easy task. After a visit from Simon Lukies of OnePlusOne I was convinced it was time to move even though I had been with the other accountants for... Read more >>
    Alan Wills, Owner Remedies Laser and Skin Care Clinic Topsham

  • I have used one plus one since they took over from
    Ashley Dawes and they have been brilliant. As a sole trader my accounts are straight forward, but I am what they must think, a nightmare customer!! I am always chasing my tail, approaching January to submit my accounts to them, despite... Read more >>
    Wayne Stamenkovic

 


a few of our clients ... 

one plus one accountants merristem logo

one plus one accountants rb engineering logo

one plus one accountants cutting room creative logo

one plus one accountants teignmouth logo

one plus one accountants remedies logo