Tax allowances for small businesses

cheekykid

We are starting a small business and we are flooded with bills especially the business rate £710 per month is particularly painful.

Am looking for reliefs

Are there any tax allowances or "free" loans for new businesses where you repay it back once you are profitable?

I know the tax allowances of writting off the purchases you've made for the business against your yearly income allowance but thats hardly helpful to me.

A friend told me that during the 1st year you pay no taxes for your business? is this true?

laticsforlife

cheekykid wrote: »

We are starting a small business and we are flooded with bills especially the business rate £710 per month is particularly painful.

Am looking for reliefs

Are there any tax allowances or "free" loans for new businesses where you repay it back once you are profitable?

Not really but with the credit crunch Gordon said you can call HMRC and they will help in arranging stage payments etc.

I know the tax allowances of writting off the purchases you've made for the business against your yearly income allowance but thats hardly helpful to me.

Why not, after all this means you are only paying tax on your profits

A friend told me that during the 1st year you pay no taxes for your business? is this true?

er no.

You don't say whether you are a company or simply 1 or more people in business. If the former then your accountant will sort out your Companies House returns, accounts and Corporation tax returns.

But from your inexperience I'm guessing you are not Ltd (why would you be really there's no longer any tax breaks), so as either an individual in business or as a partnership you WILL still have your personal allowances before you pay any tax.

I suggest you call HMRC helpline (the real one not some scam as identified on Watchdog) on 0845 915 4515 (the newly self-employed helpline)

Ask about what courses they offer

cheekykid

laticsforlife wrote: »

You don't say whether you are a company or simply 1 or more people in business. If the former then your accountant will sort out your Companies House returns, accounts and Corporation tax returns.

I'll be beginning a small company, family run, so no employees other than us and we will be registered as self employees.

cheekykid

Also to begin with and for the near future we won't be having revenue of over 68k so we dont have to be VAT registered however does it worth registering anyway? What are the advantages of being VAT registered or non registered?

Money_Grabber13579

The advantage of being registered is that you can claim VAT back on most of the stuff you buy.

And in the first year, you'll probably end up paying more tax because of overlap relief.

cheekykid

Money_Grabber13579 wrote: »

The advantage of being registered is that you can claim VAT back on most of the stuff you buy.

And in the first year, you'll probably end up paying more tax because of overlap relief.

which reliefs would overlap? why would we pay more? what are the disadvantages of being vat registered? thanks

fengirl_2

If you are VAT registered, you would have to charge VAT to your customers, which may not make you competative. You need to compare what you are charging with other people and weigh up the potential costs.

You get tax relief for all your business expenses, but of course this is no help to you if you are not yet paying tax.

laticsforlife

Overlap relief is something that can be overcome by aligning your accounts (however simple) with the year end of 05 April (or 31st March by concession).

Advantage of VAT
Kudos of having a VAT number on your letterhead

Disadvantage
Paperwork every quarter
Charging 15% to your customers
Working out if any of your supplies are exempt or zero rated

As you are in business to make a profit then you would presume that your sales will exceed your purchases so the amount of VAT you must charge (on each sale) and the amount you can reclaim (from each purchase) will still leave you with a bill each 1/4. Probably best not to right now.