 Introduction
Starting a business can be stressful enough without having to worry about, tax, National insurance, VAT, Health & Safety, audited accounts...or as it is commonly known 'Red Tape'. However, not every business needs to have all of these areas investigated before commencing business. For example, a business does not need to register for VAT if it has a turnover of less than £64,000. This article will help you identify the areas that you will need to understand when starting and running a small business. The article will give you general start-up information and links to further information form our own database in addition to specialist Government web sites.
Registering as Self Employed
If you are self-employed, you need to register with the Inland Revenue. You can do this through two ways:
Not sure if you are self-employed? If you can answer 'Yes' to the following questions, it will usually mean you are self-employed.
Are you free to hire other people on your own terms to do the work you have taken on? Do you pay them out of your own pocket?
Do you have to correct unsatisfactory work in your own time and at your own expense?
If you are still unsure, contact your local HMRC Tax Office to find out:
The Structure of Your Business
Special rules are enforced if you’re working in the construction industry, or if your business is a:
If you are unsure whether to form a limited company or be a sole trader, visit the following page to help you decide:
Income Tax & National Insurance
Income tax and National Insurance rates vary between employees depending on their income and personal circumstances (i.e. marriage, children, disability, etc).
These rates usually change during the yearly budget so it is important that you keep note of any changes.
For more information, visit our pages on:
Value Added Tax (VAT)
Each year the Government sets a figure - should it be the same as the previous year or different - which if met by your company, you need to register for VAT.
If your business satisfies any of the following statements, you need to register for VAT:
If your taxable turnover in the previous year exceeded £64,000
If your taxable turnover in the next 30 days is expected to exceed £64,000 Furthermore, if you are currently trading - or plan to trade - with suppliers in EU countries, you are also required to register for VAT within 30 days.
Are There any Other Taxes?
As well as the above, there are other forms of tax which are only relevant to certain kinds of business. Some imported goods are also liable to duties.
Some goods and services are liable to excise duty. These include:
beer, wine or spirits - mineral oils
- tobacco
- betting, bingo, casinos, gaming machines, pool betting and lotteries
Other Areas of Concern
In addition to the areas above, the following are also important and need to be taken into consideration.
Health & Safety
You are responsible for the effect your business may have on the health and safety of your employees and members of the public. You may need to register with the Health & Safety Executive (HSE) or with your Local Authority.
Fire Precautions
You may need a fire certificate, particularly if you’re running a guest house, hotel or residential nursing home. For general advice on fire precautions, talk to your local fire service.
The Environment
There are environmental regulations that may apply if your business:
uses refrigeration or air-conditioning equipment, fire equipment or solvents for cleaning produces, imports, exports, stores, transports, treats, disposes of or recovers waste produces, imports or exports packaging produces packaging waste
Buildings
You must take action if:
a new building or change of use is involved plant or machinery is installed within an industrial site, but outside a building existing premises require structural alterations
Contact your Local Authority for further information.
If you are still looking for premises for your business, visit the following:
Employee Rights
You must protect the legal rights of your employees. If you take over an existing business, you must usually keep the existing terms and conditions of employment.
Intellectual Property
‘Intellectual property’ describes things such as business names, patents and inventions. You should protect your own company name and logo, along with any inventions, product designs or copyrights. You should also respect other people’s intellectual property rights. For example, you can’t use the same name for your business as someone else doing similar work in your town.
Visit our articles on...
... for more information.
Fair Trading
The Office of Fair Trading (OFT) is responsible for protecting consumers by promoting effective competition, removing trading malpractice and publishing appropriate guidance. The OFT also issues consumer credit licences.
Keeping Information About People
If your business involves keeping information about people, you will have to be careful about the sort of information you keep and how it is used in relation to the Data Protection Act. You will also have to register if you keep such information on computer.
Licenses
A licence is required for many businesses, not just the obvious ones like casinos or public houses. For example, you need a licence to run a hotel, a guesthouse, a mobile shop or to be a hairdresser. You should always check whether your business requires a licence to trade.
Insurance
It’s good practice to have insurance to cover the loss or theft of your business property, as well as other types of possible losses. It’s also compulsory to have public liability insurance, which will often come as part of your contents insurance policy.
Providing Services to Disabled People
Under the Disability Discrimination Act 1995, you must do everything you can to make sure that disabled people can benefit from the services you provide.
For further information, call the Disability Rights Commission Helpline on 08457 622 633.
Starting Business Information Guide
The Inland Revenue offer an excellent Starting Business information guide that will help you with:
getting your new business off to a good start tips on keeping records the basics of income tax, National Insurance and VAT tax credits and allowances you may be entitled to how to get further help
Notes:
1. The guide is a PDF file. To download a PDF file you will need Adobe Acrobat Reader (free download):
2. The guide is a 1.5MB file and therefore will take some time to load with a 56k modem. If you have broadband, it will take approximately 1 - 2 minutes to download (depending on your connection rate).
3. If you plan to print the guide, there are 98 pages: paper and ink at the ready!
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