Starting a Business, Registering self employed and for VAT - The steps required

northerner79

Hi All,

Sorry to trouble you but really hoping you can help!

I am in the process of starting my own company and have registered as selfemployed but not received any forms through the post.

I am also in the process of registering for VAT, can I do this all online? I have started completing the forms but seem to be required to complete certain application forms such as the VAT 1 by hard copy and post in. I need to open a business bank account first which I will do Monday or Tuesday.

If I am trading do I need to regsiter the company at Companies House?

This is all nw to me, I have my PI insurance and other stuff sorted out and am ready to operate, I just want to do everything right.

Is there any other steps I should be taking?

Thanks for any help/advice you can give me.

Cheers

nexuss

What kind of business are you setting up ? I ask as sometimes they visit you especially if it is a business involving mobile phones or computers.

Horace

If you are setting up a business you dont have to set up as a limited company nor do you need to register for VAT straight away. Have a chat to businesslink (they give free advice on how to set up your business) https://www.businesslink.gov.uk, once you have decided to set up and have an idea of what you are doing then contact the HMRC https://www.hmrc.gov.uk as they help people who are self employed so that you can register with them for tax and NI. There is a high threshold of around £60K (I think that's the figure although I could be wrong) that your business would have to take before you need to register for VAT.

Setting up a sole trader is probably the better way to go in the first instance rather than going straight to a limited company as with a limited company you have to pay yourself a wage, pay class 4 NI and tax plus you would pay Corporation Tax and submit VAT returns. If you are a sole trader - you pay class 2 NI (sometimes Class 4 as well), tax - whilst starting and if you are on low income you can get an exemption on your Class 2 NI as well.

HTH

northerner79

Thanks for your help. I will get onto this, I will be working with my brother and between us we would hope sales to be in excess of 60k. We are not initially going to be taking a wage, but obviously anything that can help on contributions etc would help. We aim to put all profits back into the business for the first 2 years.

ukbill69

Setup a limited company, need help, search this forum, there is a wealth of info on here, I know ive been adding stuff for years.

northerner79

Cheers Bill

hopefulfooluk

Before you start up as a limited company make sure you speak to an accountant about the pros and cons of operating as a ltd as opposed to a partnership. It's easy to incorporate, but there can be nasty consequences of moving back from ltd to partnership/sole trader. Can you not start up as a partnership and then incorporate once you decide things are going well? It'll also help keep your accountancy bills down and you can ride cashflow problems better as a non-limited (in my opinion).

VAT you can register wholly for online. Worth doing if you're only supplying VAT registered people as it makes no difference to them, but you can then claim back on the VAT you pay when purchasing goods and services for your business.

Pennywise

northerner79 wrote: »

Thanks for your help. I will get onto this, I will be working with my brother and between us we would hope sales to be in excess of 60k. We are not initially going to be taking a wage, but obviously anything that can help on contributions etc would help. We aim to put all profits back into the business for the first 2 years.

You don't take a "wage" from a sole trader or partnership. If you draw monies out they are called "drawings" and aren't an expense as such.

Also, even though you plan to reinvest your profits, you will still probably have a taxable profit each year leading to income tax and NIC liabilities. For example, buying "stock for resale" isn't an expense until you sell it. So if you made £10k profit in a year and bought an extra £10k of stock with it, you'd still have a taxable profit of £10k for that year. Also, taxable profits have to be worked out on the "accruals" basis which means you have to take into account monies owed by you and to you, so even if you've not received money from a customer as at the year end, you still have to include it and pay tax on it.

I'd say you'd really benefit from getting an accountant now rather than later. They would then be able to work through the start-up with you, talk about the differences between sole trader, partnership and limited companies, set up your book-keeping, etc. It's a lot cheaper to get proper advice now than to make mistakes and risk paying too much tax or paying an accountant to sort out your mess later.

northerner79

Thanks for your excellent advice. Accountant appointment on Friday!!