I am looking into starting a company. I am currently in Full Time Employment and I intend to remain in Full Time Employment whilst I operate the company. The company is a weekend thing that can only be operated at the weekend. What I need to no is: How does tax and national insurance work?Are there any restrictions on being in Full Time Employment and Owning a Company?What kind of records do I need to keep?Can petrol be of set in expenses?Thanks
First you need to decide what type of company to set up.If you are providing a service to someone - eg plumber, gardener, mechanic etc you should be a sole trader, you will not need to notify Companies House, nor deal with any administrative or accounting requirements which are required of limited companies.You must register with HMRC as self-employed, even if you already send in a tax return. The advantages are that you can carry on using your personal bank account as your business account. Essentially, your business income is counted alongside your existing personal income, so the accounting side of your business will be very straightforward. But, you will be personally liable for any debts you incur in the running of your business which you wouldn��t be liable for under the limited company route. Self employed people are also liable for Class 2 NI contributions (currently ��2.40 per week: 2009/10 Tax Year).In terms of accounting, you will need to submit an annual self assessment form to HMRC annually.A Ltd company...is more complicated, you ll have to register your company with Companies House (an accountant/solicitor/specialist broker can do this for a one-off fee of ca ��150). Essentially this looks more official and gives you personally greater protection against bad debts. Tax wise you pay class IV and corporation tax and the rest you can pay (after expenses etc) as a dividend. So you ll pay less tax, but the accountancy side is more exacting and annual accounts will need to filed annually and you ll likely need a qualified accountant, so that will cost more. There are also partnerships and limited liability partnerships which are variations on the above. As regards being in full time employment and owning a company, first if you are working for someone else consult your work contract - they might not allow it, in which case you can set up the company in the name of a spouse, parent or similar. You are best off getting an accountant to answer the technicalities of this though.What records...all cash in and all going out - book-keeping plus related business expenses - whether professional services, parts, post, stationery etc. Essentially a record of everything you spend on the company. Keep any information and documents that you may need to help you fill in your tax return or to make a claim. If you lose a few receipts don t worry - especially if they are for minor amounts, but don t of course go claiming for stuff that is not relevant to your business. Petrol...you can charge 40p per mile for the first 10,000 miles and 25p per mile thereafter, in any one tax year. But going to/from home your place of work is not business mileage. Essentially keep a log of where you went and when and the mileage.If your t/o is above ��67,500 you ll have to register for VAT and keep records for that too. Lastly, in my experience provided that you file accounts in good order and don t make too many mistakes HMRC are unlikely to hassle you - there are more than enough tax cheats out there to worry about whether a small businessman has claimed a few receipts illegally.
I run a small business and find that calling the IRS or government tax office to be very useful. They can give you a better idea of details.I don t think there are restrictions on working while running a business, in fact many financial institutions might be more willing to help you out if you are.You need to keep meticulous records. There are programs like Quickbooks that are an asset to any business. You might also want to hire an accountant and/or business manager.Not too sure on the last part. I would again ask your local government tax office for that type of detail.
before you start you need to construct a robust business plan and keep perfect records of all income and all expenses as this is what your tax will be based on.My husband is self employed and pays his N.I. by standing order as a percentage of his gross earningspetrol can be an expense if you use a vehicle in the running of the business
If your serious about owning your own company, even a small one, there are three things you need; an accountant, a lawyer and a banker. That doesn t mean you have to spend thousands, but without them, your opening yourself to major problems.And you ll get much better advice than you will on a website.
The citizens advice bureau will give you paperwork telling you all you need to know about starting a business free of charge .Personally i would start the business keeping a good percentage of the profits in a safe place and wait for the gov vultures to inform me how much protection money they wanted to allow me to stay in business .
Yes you can do both as long as you declare your full earnings at the end of the year. An accountant would be able to answer all of these questions properly
you can do both.you need to keep a money log that covers everything you do IE how much you spend, how much you earn, how much goes into product, how much is bills for the company such as storage etc.. and profits.this will help you at the end of each month and the end of the year. would be nice to know your making money i mean what if you spend $500 running the company but only take in $480 at the end of the month well thats not good is it you might want to track that etc..taxes at the end of the year will be a pain without records.you will be filling 1099 more than likely and that means you need to save about 30% of what you earn so that you can pay taxes at the end of the year. hey you can take that 30% and invest in short term cd s or other short term municipal bonds etc... hey if you have to save it why not make some money off it.the key here is save that 30% because the last thing you want is to do taxes at the end of the year and be told you owe the irs $7k and not have it. what would be nice is to have that 7k in the bank and have earned say another 800 off investments and then be told you only owe $3500. even if you owe 7k you still have the 800 in your pocket. get a website and have it SEO d (search engine optimization) even if just for regional seo. web advertisement is so much cheeper and efficient than dong paper advertisement.also depending on the company you work for you might need to look into a no compete clause. IE you work for verizon but want to sell sprint cellphones on the weekends from you mall cart.
