As the number of new businesses continue to rise, it's crucial to ask accountants these key questions.

Question 1: What structure should my business have?

When starting a business, or if you have started a business, the first few questions you should ask an accountant is crucial. In the UK, various business structures exist, each with its own set of advantages and disadvantages. A trustworthy accountant can guide you in selecting the most suitable structure for your business.

Different structures of business in the UK are:

  • Sole proprietor: One person who owns the business and operates within this business structure.
  • Partnership: A partnership operates similarly to a sole proprietor but involves two or more partners.
  • Limited liability partnership: Each partner’s liability is restricted to their invested amount. Every partner is responsible for paying income tax on the profits generated from the partnership.
  • Limited company: It has a separate legal entity from the people that own the company. Once the corporation tax is paid, the owners can take a salary and additional income can be taken through having dividends if there is sufficient profit within the limited company.

Each business structure has its own tax structure and legal liabilities. Consulting with an accountant is essential to address these matters accurately.

Question 2: Your Tax Responsibilities

Once you have decided which route to take with your business structure, it is important to learn what your tax responsibilities are. There will be different tax responsibilities with each type of business structure.

The different types of tax in the UK are:

  • Income tax
  • Corporation tax
  • Payroll taxes
  • VAT
  • Import duties

Your accountant will help you understand your tax responsibilities. You will also need to know how to file your taxes, what dates you will need to file them and what information you will need.

Question 3: Which records should I keep?

It is always incredibly important to maintain healthy business records.  With HMRC’s making tax digital, it is essential to have digital copies.

Here are some of the most common records that every business should have:

  • Financial statements
  • Business and personal tax returns
  • Bank statements
  • Contracts
  • Insurance documents
  • Invoices and receipts
  • Record of stock

Having an accountant as part of your business team is not just a smart decision; it’s an invaluable asset that can drive your business towards long-term success. Accountants bring a level of expertise and insight that goes beyond number-crunching. They offer strategic financial planning, ensure compliance with ever-changing tax laws, and provide critical advice that can help you make informed decisions. Their skills can free up your time, allowing you to focus on what you do best running and growing your business.

“Businesses over time – There were 5.6 million private sector businesses in the UK as of 1 January 2023, 0.8% more than in 2022. This was the first year since 2020 in which the business population has increased. The total business population is still 7.1% lower than January 2020 levels. Over the longer term, since 2000, the total business population has increased by 60%. This growth, and the decline in the business population since 2020, has been driven by small businesses with no employees, the largest category of UK businesses.”

(Source: https://commonslibrary.parliament.uk)

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