1. Decide on you how should trade. Should you be a sole trader, a partnership or a limited company?
- Sole trader. Nice and simple and cheap to run. All the profits are taxed on you as they are earned.
- Partnership. Look at this if you are in business with others or a spouse.
- Limited Company. Consider this if your profits are over £25k pa. You also have the protection of limited liability. More red tape and more expensive to run.
If you are unsure, start off as a sole trader – you can also change later.
2. Register the business with HMRC (within 3 months of commencing).
3. Open a separate bank account for the business.
Either use an existing personal account (clear it down to nil first) or open a new one
4. Get a bookkeeping system in place.
5. Check whether you need to register for payroll.
6. Check whether you need to register for the Construction Industry Scheme (CIS).
7. Check whether you need to register for VAT.
You have to do so if your turnover exceeds £85k in the last 12 months. If all your customers are VAT registered, you may wish to do so anyway to claim back the expenses on your expenses.
8. Are you a one-man company working on individual contracts? Have you considered IR35?
9. Know your deadlines and budget for your tax payments.
If you are late filing Returns you will usually incur penalties starting at £100 which then significantly increase.
10. Get an accountant to help. We take pride in the services we supply.
Published 16 March 2018.