The status of tax of your company depends upon what kind of business you are doing. You need to find out the status of tax of your company. This will also decide when you require beginning the payment of tax.
You are running the business owned by you as an individual if you are a sole trader. Being a sole trader, you have following responsibilities of the tax:
- National Insurance payment
- Income tax payment on the profits of your business
- Filing a self-assessment return of tax every year
- If you anticipate your total income to more than £83,000 during a year, then you require registering for VAT (Value Added Tax).
If you are the owner of a limited company, this means that to run your business, you have set up your company. The limited company is accountable for all the things it doing and the wealth of your limited company is distinct from your personal wealth. This also means that company will get all the profits of the business done by the company and before getting the profit, it has to pay the corporation tax.
If you own a limited company, then you have to fulfill the various responsibilities of the tax every year.
- You require sending tax return of the company to the HMRC
- You also have to compile all the statutory accounts of the limited company
- If you get the salary, then you have to pay National insurance and the tax via the system of the PAYE
- You need to file a self-assessment return of tax every year
- You also have to register for value added tax, if your total earnings are more than £83,000 in a year
If you are the owner of a limited company, then you have the choice to merge your annual returns of tax and companies house accounts. You need to submit them simultaneously as compared to separately through the website of the HMRC.
You can also Read – Benefits of Limited Company
An Ordinary Business Of Partnership
When you along with some partners share the responsibility of your business then it is known as an ordinary business of the partnership. You require sharing all the profits of the business equally among all the partners. You and your partners have to pay tax on the income they received. The responsibilities of tax on the partners for an ordinary business of partnership are following:
- The partners need to pay:
- National Insurance
- Income tax payment on profit sharing
- Sending a personal self-assessment return of tax
- VAT registration if your annual earnings in a year are more than £83,000
When To Begin Payment Of Tax
If you are doing a sole trading business, then you need to finish the self-assessment return of tax to compute your bill of tax. As an employee, you will get the similar personal allowance. This also means that for the tax year 2016-17, on the first £11,000 earned by you, you don’t; require to pay any tax.
You can also Read – Do I Require A Self-Assessment Tax Return?
If you are running an unincorporated association, cooperative association, a club, a foreign company with the branch in the UK, or a limited company, then you require paying corporation tax on the profits of your business.
You don’t get a bill for the corporation tax paid by you; therefore, it is better if you take the services of an accountant to make sure that no any payment is missed by you and for keeping your records of accounting. Subject to the corporation tax, the profits include the money making by the company from selling assets, investments and doing the business.
If you recruit some staff for your business, then you require running the scheme of PAYE. You can use this system to get the contributions from the National insurance and income tax from the wages of the employees before paying the salary to the employee. The code of tax of an employee displays the amount of tax which is deducted from the wages of an employee.
You require making sure that your payment of VAT will reach HMRC at the proper time otherwise you require to pay the surcharge.