Tax For Small To Medium Size Business

Colin Richards

Description

Without a doubt one of the biggest headaches for all business owners is the issue of taxation and making sure that the correct tax is paid when due. This comprehensive guide to Business and Taxation is an up-to-date guide to all of the issues concerning the operation of a compancy. It deals with all areas of tax, from an outline of the tax system to what should be paid and when.

Sujets

• Taxation
• Gestion et management
• Tax
• Imposition (fiscalité)

Informations

• Publié par: Straightforward Publishing
• Date de parution: 25 juin 2017
• Nombre de lectures: 0
• EAN13: 9781847167569
• Langue: English

Extrait

A STRAIGHTFORWARD GUIDE TO
TAX
FOR SMALL TO MEDIUM SIZE BUSINESS
COLIN RICHARDS
Straightforward Publishing www.straightforwardco.co.uk
Straightforward Guides
Straightforward Publishing 2017
All rights reserved. No part of this publication may be reproduced in a retrieval system or transmitted by any means, electronic or mechanical, photocopying or otherwise, without the prior permission of the copyright holders.
ISBN: 978-1-84716-700-2
ePUB ISBN: 978-1-84716-756-9
Kindle ISBN: 978-1-84716-755-2
Printed by 4edge www.4edge.co.uk
Cover design by Bookworks Islington
Whilst every effort has been made to ensure that the information contained within this book is correct at the time of going to press, the author and publisher can take no responsibility for the errors or omissions contained within.
Contents
Introduction and General Overview
Chapter 1-How the Tax System Operates in the UK
How the tax system works
HMRC
Assessment of taxes-Self Assessment
If you ve been told to send a return
Claiming tax relief
Registering for Self Assessment
Companies
Maintaining tax records
Cash basis accounting
When cash basis might not suit your business
Who can use cash basis
Who can t use the scheme
Keeping records
Inaccurate or late returns
HMRC compliance checks
Chapter 2-Choosing a Business Structure
The sole or proprietary business
Partnerships
Limited liability partnership (LLP)
The limited liability company
What type of business would suit me?
Notifying HMRC
Chapter 3-The Range of Taxes a Business is Liable For
Direct taxes
Indirect taxes
Income tax
Calculation of personal Income Tax
Calculation of income tax for sole traders
Companies and Corporation Tax
The payment of dividends by a Limited Company
Capital gains tax
Capital Gains Tax allowances
Work out your total taxable gains
Tax rates from 6 April 2017
If you pay higher rate Income Tax
If you pay basic rate Income Tax
Inheritance tax
Inheritance Tax rates
Passing on a home
Giving away a home before you die
Gifts
What counts as a gift?
Exempted gifts
The 7 year rule
Double-taxation treaties
National Insurance
National Insurance classes
Payment of National Insurance
VAT returns
Chapter 4-Calculating Profit and Loss From a Business
Calculation of profits
The preparation of accounts
Accounting conventions
Calculating income
Expenses
Direct expenses
Overheads
Capital and revenue expenditure
Drawings from a business if you are a sole trader or partner
Calculating profits
Profit averaging
Calculating losses
Sole traders or partnerships
Companies
Trading losses
Failed business investments
Chapter 5-Business Equipment-Capital Allowances
General Allowances
Other capital allowances
What counts as plant and machinery
Integral features
Fixtures
If you let residential property
Annual investment allowance
What you can t claim on
When you can claim
If you don t want to claim the full cost
Items you also use outside your business
If you spend more than the AIA amount
Mixed partnerships
More than one business or trade
First year allowances
Business cars
Sole traders and partners
Employees
What counts as a car
What doesn t count
Rates for cars
Using cars outside your business
How to claim
When you can claim
When you bought it
Chapter 6-Paying for Employees
Taxes to pay when employing someone
Statutory Maternity Pay and leave
Statutory Maternity Pay (SMP)
Statutory Paternity Pay and leave
Adoption pay
Company directors
Self-employed or a partner
Registering as an employer
Operating a payroll scheme
Taking on a new member of staff
Check you need to pay someone through PAYE
Working out if someone is an employee or self-employed
Temporary or agency workers
Employees you only pay once
Volunteers
Students
Get employee information
If your employee has more than one P45
Work out your employee s tax code
Student loan repayments
What you need to do
Special rules
Stopping deductions
Registering your new employee
Taxing Perks
Chapter 7-Business Premises
Operating a business from home
Business rates
Renting a business premises
Purchasing a business property
Freehold sales and transfers
New leasehold sales and transfers
How much you ll pay
Financing your property
Selling a business property
Capital allowances
Business Premises Renovation Allowance
Qualifying spending
Leases of property
VAT
Disposing of business property
Entrepreneurs relief
Rollover relief
Eligibility
Partial relief
How to claim
SEED Enterprise Investment Scheme Relief
Chapter 8-VAT
Charging VAT
Responsibilities
VAT rates
Standard rate
Reduced rate
Zero rate
What you must do when charging VAT
VAT-inclusive and exclusive prices
VAT-inclusive prices
VAT-exclusive prices
When not to charge VAT
Exempt goods and services
VAT registration
Charging VAT to charities
Discounts and free gifts
Exceptions for gifts and link-save offers
Free goods and services
Providing services to EU businesses
Chapter 9-Business and Pensions
The State Pension
NI contributions counting towards a basic state pension.
Class 1 contributions
Class 2 contribution-
Class 3
Class 4 Contributions
Occupational pensions
Private Pension Savings-General-The lifetime allowance
The annual allowance
Limits to benefits and contributions
Automatic enrolment
If the employees income is low
Choosing a pension scheme
Employers/employee contributions
Opt-out
Self-employed: what kind of pension should I use?
Chapter 10-Closing Down, Selling/Passing on a Business
1. Closing a business down
Self-employed or partnership-unincorporated business
Income tax
Allocating profits to tax years
Overlap relief
Treatment of stock
Treatment of capital allowances
Any income or expenses incurred after your business has ceased trading
PAYE scheme
VAT registration
Closing down a limited company
Striking a company off the register of companies
Deregistering for VAT
Closing down a PAYE scheme
Making staff redundant
2. Selling a business
Sole traders
Partners
Limited company
VAT
Cash or shares?
Earn out
Other important areas to consider
3. Passing on a business
Giving away your business
Gifts relief
Eligibility
If you re giving away business assets
If you re giving away shares
Working out the relief
How to claim
Inheritance tax
If you die-what happens to your business?
Useful addresses and websites
Appendix 1. Tax rates and allowances 2017/2018
Index
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Introduction and General Overview
As the title suggest, this book deals with small to medium size businesses and taxation as it affects such businesses. Small businesses include sole traders and partnerships plus limited companies. The book doesn t deal with larger more complicated businesses such as Public Limited Companies, as accounts and taxes tend to be more complex and professional advice is needed (and usually employed).
Most of the areas covered in the introduction will be covered in more depth as we go through the book. As part of the overall approach, we will start by dealing with the range of taxes payable, including personal taxes, which are an integral part of the whole calculation when arriving at the final tax returns to HMRC. We then take a structured approach to outlining tax liabilities, detailing:

the overall operation of the tax system in the United Kingdom
the actual process of forming a business within the framework of taxation
the calculation of profit and loss from a business
how to deal with calculation of business equipment from a tax standpoint
the all important costs of employees; business premises; the dreaded VAT
closing down or selling a business.
First, before setting off, we should take a look at business generally, starting and running a business, the concepts of profit and loss, self assessment, the form of your business such as sole trader or limited company and what happens when you have built up a business and decide to either close it down or sell it on.
Tax and business generally
One of the main areas to think about at the outset is what type of business do you want? This is important because the type of business will have an impact on the taxes that you pay. You will need to decide whether you want to operate outside of the framework of a limited company and be a sole trader or partner or whether you want to set up a limited company. Basically, businesses can be Sole Traders, Partnerships, a Limited Company or a Limited Liability Partnership. What binds all business is the need to keep books of account and present final accounts to HMRC.
Whether or not a company is more tax efficient depends very much on how profitable the business is and how much you intend to take from the business for your personal use.
Sole Trader
This is a self employed individual who is personally financially responsible if things go wrong, for example if the business cannot pay its debts and taxes. If problems occur, the individuals home and assets may be at risk.
A Partnership
This is more than one self-employed person working together to make a profit and sharing everything on an agreed split. Each partner is personally responsible for all debts run up by the partnership as a whole except for tax debts (individuals are responsible for their own tax debts).
A Limited Company
This is a separate legal structure where the liability of owners of the business is limited to the amount of their shares. Any legal action has to be against the company not the shareholders and the shareholders personal assets are safe.
A Limited Liability Partnership
This has many of the features of a normal partnership-but it is like a limited company in that members of an LLP cannot usually lose