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Starting a new job or starting in business? Our 'At a glance' guide takes you through the key steps in getting started for tax, with links helping you drill down for more detail.

A 'Freeview guide'.

At a glance

Start here

1. You are planning to start a new business and your options are:

  1. Going self-employed as a sole trader.
  2. Running the business through a new company.
  3. Going into a partnership (you need two or more of you to run a partnership).

Note: If you are recruited and paid by an agency the chances are that will not be self-employed but an employee.

If you are unsure of your employment status there are four key things to consider:

  • What is the difference between being self-employed and employed?
  • Will the tax rules automatically treat you as employed or self-employed?
  • What do you really want to do: be employed or self-employed??

Useful FREEVIEW guides if you are unsure whether you are self-employed or not:

 

2. Once you know that you will be 'self-employed', choose which 'trading style' or 'trading vehicle' is best for you?

If you are unsure of the different trading styles and vehicles, these guides take you into more detail:

 

3. Do you want to consider tax advantages and cost savings? 

There may be some key advantages, as a start-up in setting up as a sole trader than via a company or partnership: it depends on individual facts and circumstances.

Note that:

 Compare different trading styles and trading vehicles with these guides:

 

4. What are the legal requirements to set up in your choice of trading vehicle?

Sole trader

Partnerships

See our guide A new Partnership: Start here...

Companies

See our guide Starting a company: Start here... 

5. Trading names

Your business needs a name. It can be just your name or you may want something original to stand out in order to attract new clients online and you will probably require a website.

Check that:

  • If you are registering your business with a professional body or trade organisation that your proposed business name satisfies their guidelines.
  • If you are intending to trade via a limited company, go to Companies House, Webcheck and check that the name is not already taken. 
  • Go to a website, such as Namesco (other domain registrants are available) do a domain search and check that the name is available as a URL.
  • Go to Twitter and see if you can buy an account that is similar to your chosen name.
  • Go to the Intellectual Property Office website, https://www.ipo.gov.uk/types/tmtext.htm and check that no one has trademarked the name that you have chosen.

Domains

  • If you can purchase the .com and .co.uk versions of your domain then buy both to protect your URL.

 

6. Registration for tax

Registration with HM Revenue & Customs

If start in business, whether as:

You need to open an account on the Government Gateway www.gov.uk and register with HMRC. You will need to upload your ID and proof of address.

Sole traders

See Self-employed: Registering for tax

Employers (individuals, partnerships or companies)

If you are going to employ any staff you must register with HMRC and operate PAYE.

Construction industry Employers: Construction Industry Scheme (CIS) 

If you are a contractor you must operate the CIS on your workers unless they are employees or their work is outside the CIS scheme.

VAT

You must register for VAT if:

If you don't have to register for VAT you can choose to do so if you will be making taxable supplies.

See VAT: Starting in business

7. Record keeping and accounting for tax and : sole traders and partnerships

You have a choice of kind of 'system' you use for tax.

Most small business stick to the cash basis as its pretty simple to use.

You can also decide to use a system of fixed-rate expenses, instead of claiming your actual costs.

For example, HMRC allows you to use a milege rate of 45p/25p per mile, if you use those rates you only need to record your mileage and not have to retain your fuel bills.

These things are supposed to simplify accounting for tax but they are very confusing.

See our fantastic guide, Accounting: Simpler Income Tax (cash basis)/fixed expenses

Accounting: companies

 8. Miscellaneous FAQs

Pensions: you can contribute to a pension scheme as a method of saving for your retirement or passing down your wealth to your family when you die.

If you take on employees, you will need to set up a workplace pension scheme.

9. Tax Planning

Tax planning guides are available throughout the website, see the left hand menu.

A handy index for company owners is:

See Indexes to essential guides in this series

Starting up: Index

Guide & link Details

Starting work 1. Self-employed or Employed?

What is the difference between being self-employed and employed?

Starting work 2. Special rules for certain types of worker

Are you starting a new business or is it a 'gig' job?
Will the tax rules treat you as employed or self-employed?

You might not be thinking you are starting a business: your employer may decide that you are self-employed alternatively the tax rules may deem that you are someone's employee and not self-employed after all.


Starting work 3. How employees are taxed
.

How are employees taxed?


Starting work 4. How the self-employed are taxed
.

What are the tax rules if you are self-employed?

Self-employment: Registering for tax How to register for tax, when to register, when to pay tax

Trading vehicles

Running a new business: understanding what 'trading styles' or 'trading vehicles' can you use?

 

Am I going to be running a business? Is it a trade or an investment activity?

Is your intended business a trade, a profession or vocation, or an investment activity? The distinction is very important not only for tax purposes but also for setting up the right ownership structure.


Which trading structure is suitable for me


All things considered so far: which structure is going to work best? A sole trader, in partnership, or running a company?


Partnerships

Can you explain the different types of partnerships?  A concise comparison of the different types of partnership recognised in the UK.


Sole trader v limited company
:

'At a glance' can we compare the tax and legal treatment between being a sole trader and running a company?

 
Sole trader v limited company: Tax differences and savings

From a purely tax point of view, it is more efficient to run your business as a sole trader or as a company?


Will I pay less tax if I work via an LLP?

Different types of trading structures all have their own tax advantages and disadvantages: what are the key issues if you run an LLP?

CGT: Reliefs, disposal of a business or its assets

Which Capital Gains Tax (CGT) reliefs apply when a person, replaces or disposes of an asset used by a business, the whole or part of a business, or shares in a company?

 

Top Tips

Top tips

Have a plan

Start as a sole trader

Chose your trading or business name with care

Register for tax and National Insurance as soon as you start trading

Accounting and tax software

 


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