When you decide to set up a new business, there are a number of things that you must do to ensure compliance with regulations. You must inform HM Revenue & Customs as soon as you become self-employed, whether as a sole trader or as a partnership. Once registered with HMRC, they will send you a Unique Taxpayer Reference, which you will need for any future enquiries.
Depending upon the type of business you are starting, you may need planning permission or permits before you can legally trade. You should check with your local authority, especially before you start any alterations or commence trading. Your local authority will also be able to tell you if you need to pay business rates and how much these will be. Consider what you expect your turnover to be, because if it exceeds the current VAT threshold, £73,000 at the time of writing, then you will be liable for VAT and should inform HMRC. At any time, if turnover exceeds this amount you should let HMRC know immediately.
If you are going to employ staff, you will have to inform HMRC so that a PAYE scheme can be opened. A PAYE reference number will be issued, which you should use when contacting HMRC regarding your employees. If you are a contractor or subcontractor in the construction industry, you should also contact HMRC for industry specific regulations.
Prior to trading, it is essential to set up a financial record keeping system to keep all transactions in an orderly manner. Accurate and timely record keeping is deemed essential and it is possible that you will have your records checked by HMRC. Poorly maintained or inadequate records could result in a fine being charged. Make sure your name is on all business stationery, invoices, cheques and receipts before commencing in business.
A limited company has other responsibilities before trading. In addition to registering your business as a limited company, you have to make sure that your company’s name is clearly displayed at the registered office and other business premises. The company name has to be displayed on a company website and all business stationery, including letters, invoices, cheques and receipts. All order forms, business letters, emails and faxes from the company must display the registered office address, the registration number and the place of registration. If the name of a company director is included on business letters, other than as the signatory or actually in the body of the letter, then all company directors must have their name included on the stationery.
Before a limited company may trade, ensure all forms and registration documents are submitted to the Registrar of Companies at Companies House, with all documents dated and signed by relevant directors. If your application for status as a limited company has been successful, you will receive a certificate of incorporation from the Registrar of Companies. The business is only recognised as a limited company when this has been issued. HMRC also needs to know that you have set up a limited company. You should inform HMRC as soon as possible so any relevant forms can be sent to you for completion.
There are a number of responsibilities, tax and reporting obligations required when you set up a business. Whether you are a sole trader, partnership or a limited company, there are many obligations to ensure you remain compliant. Failure to be compliant may result in a fine or penalties. As the process of starting a business can be a complex area, it is advisable to seek professional guidance to ensure you are fully compliant with all regulations and requirements of starting a business.
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Disclaimer: The information contained in these articles is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.