Five Practical Business Tips Every Startup Should Know
by Startacus Admin
4. Compliance with the Law
Many start ups are not aware of what they must do to be compliant with the law, for example:
- Sole traders and partnerships must notify HMRC when they start trading. If they don't, there are penalties. You can notify them via the HMRC
web site. - You must keep proper accounting records. That means sufficient to provide the relevant details of all transactions. So, for example, HMRC might ask for a breakdown of all your cost of materials, select one and ask to see the invoice. If you can't produce it, they will disallow that cost and assume you have others that you can't justify. Apart from having your costs disallowed and your tax increased, there are penalties for failure to keep proper accounting records.
- If you are employing staff, you will need to register a payroll scheme with HMRC and account to HMRC for tax and National Insurance contributions on their salaries.
- If your sales go over the VAT registration threshold, currently £81k pa, you need to register for VAT.
Now there is no way most people would know about these things. And there are other things most people would not know about, such as what you need to do in order to be able to claim motor expenses against tax and how you can claim extra VAT back when you start a business. So keep your accountant informed about what you are doing - preferably before you do it, because sometimes, if you miss an opportunity, you can't go back and fix it.
5. Use of Home as Office
If there is any part of your home that you use exclusively for work at any time, you can set a portion of the costs of running your home against your taxable business profits, so that makes your taxable profits (not your real profits) lower, and you pay less tax. If you want to know how to do this, there are instructions on the HMRC web site. Just Google "HMRC use of home". Remember, it decreases your taxable profits, not your real profits.
Who is Tom? Tom Trainer BSc FCA, is a Chartered Accountant and owner of CharteredAccountantOnline.com
Linked IN: https://www.linkedin.com/in/tomtrainer
Facebook: https://www.facebook.com/CharteredAccountantOnline
Twitter: https://twitter.com/CAOaccounting
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Published on: 10th August 2014
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