4 Taxes Small Businesses Should Be Aware Of
Part of owning and running a successful business is being aware of your legal obligations, one of which is taxes.
Taxes are essential for the running of the country as they get used for important services such as healthcare, education and national security. By complying with the law, your projected financials may look a little different than you expected.
Here are four taxes for you to be aware of so that you can plan for success in the future.
Corporation Tax
Corporation Tax is a tax that your business pays on its profits in an accounting period. This is not something that HMRC will send you a bill for, you must work it out and pay it yourself.
Keeping comprehensive records is essential for all taxes, but especially Corporation Tax. It makes filling out tax returns a lot easier, and you can prove your figures should you ever be audited. If you want peace of mind that you are doing everything correctly, tax advisors are a good investment to help you navigate Corporation Tax complexities.
Value Added Tax (VAT)
VAT is a tax that certain businesses need to abide by. Currently, the registration threshold is when your taxable turnover exceeds £90,000 in the last 12 months, or you expect it to in the coming 20 days. This is something you will need to monitor as your business becomes more successful.
Once registered, you must charge your customers the appropriate amount of VAT which you then pass on to the government minus any VAT your business has paid. Typically, VAT is charged at 20% but there are exceptions.
National Insurance Contributions (NICs)
Even though National Insurance Contributions come out of your employees’ wages, the onus is still on you as an employer to make sure this is done correctly. You will also pay National Insurance based on their wages. This is known as secondary contributions.
There are different payment limits depending on how much each person earns, so it is important that you are aware of this when working out your finances.
Business rates
Business rates are a tax that is charged on non-domestic properties such as shops, offices and warehouses. The occupier of the property is usually liable for these charges, even if you are a tenant.
Rates are calculated based on your property’s rateable value which is determined by the Valuation Office. They use data to work out how much it would cost to rent the space for a year from April 2021.
Make sure you look into the calculation to ensure it is correct. If the rates seem a bit expensive, there are ways you can get help to pay them.
Read more...
Taxes are essential for the running of the country as they get used for important services such as healthcare, education and national security. By complying with the law, your projected financials may look a little different than you expected.
Here are four taxes for you to be aware of so that you can plan for success in the future.
Corporation Tax
Corporation Tax is a tax that your business pays on its profits in an accounting period. This is not something that HMRC will send you a bill for, you must work it out and pay it yourself.
Keeping comprehensive records is essential for all taxes, but especially Corporation Tax. It makes filling out tax returns a lot easier, and you can prove your figures should you ever be audited. If you want peace of mind that you are doing everything correctly, tax advisors are a good investment to help you navigate Corporation Tax complexities.
Value Added Tax (VAT)
VAT is a tax that certain businesses need to abide by. Currently, the registration threshold is when your taxable turnover exceeds £90,000 in the last 12 months, or you expect it to in the coming 20 days. This is something you will need to monitor as your business becomes more successful.
Once registered, you must charge your customers the appropriate amount of VAT which you then pass on to the government minus any VAT your business has paid. Typically, VAT is charged at 20% but there are exceptions.
National Insurance Contributions (NICs)
Even though National Insurance Contributions come out of your employees’ wages, the onus is still on you as an employer to make sure this is done correctly. You will also pay National Insurance based on their wages. This is known as secondary contributions.
There are different payment limits depending on how much each person earns, so it is important that you are aware of this when working out your finances.
Business rates
Business rates are a tax that is charged on non-domestic properties such as shops, offices and warehouses. The occupier of the property is usually liable for these charges, even if you are a tenant.
Rates are calculated based on your property’s rateable value which is determined by the Valuation Office. They use data to work out how much it would cost to rent the space for a year from April 2021.
Make sure you look into the calculation to ensure it is correct. If the rates seem a bit expensive, there are ways you can get help to pay them.
