Whilst the government’s support schemes have helped many businesses through the current crisis, some will still have to make redundancies. Whilst many of these ex-employees will seek new jobs, others will use their redundancy pay to set up on their own.
Individuals setting up on their own will normally need to register with HMRC and submit a tax return for each year they are in operation. On this they will report their income and expenses for their new business, together with any other taxable income they receive. Tax arising from this will be due for payment on 31st January following the end of the year.
If your business becomes really successful you may also need to register for VAT. This requirement is triggered when your annual sales hit £85,000. Once you are registered for VAT, you will need to charge VAT to your customers on most goods and services. You will then have to account for VAT on quarterly returns, normally paying HMRC the difference between the VAT on your sales and the VAT on your purchases.
Such success may also lead to you taking on employees to assist you. If you pay anyone above the Lower Earning Limit for National Insurance (currently £120 per week) or take on someone with another job, you will need to register as an employer. This means that you will need to calculate tax and National Insurance contributions for your employee and account for them monthly to HMRC. You will also need to set up an Auto-Enrolment pension for them.
If you are looking to start up a new business, we can assist you with all of the above, as well as giving you more general advice to ensure you hit the ground running. Should you want to start your own business then get in touch with us today.