I want to start a company but I don't know where to begin!
Discussion
I've always wanted to be self-employed and I would like to set up a company through which to publish the music I write and the artwork that I create. I went on a course that was supposed to teach the basics of business, and it gave me a fascinating insight into things like SWOT, PEST and Marketing Mix. Many of the principles I learned were things that I had already intuitively thought of, so I was encouraged by that. What the course didn't cover, however, was the basics that I had signed-up in the hope of learning... the thing that will keep me out of prison! In a word... TAX!
Can anyone reccomend a good, simple book, DVD or web site that explains how to fill-in a tax return and how business taxes work?
It needs to be very simple and not full of jargon! Are there different types of tax returns, ie, for people who aren't a company but need to declare some income, sole trader companies, limited companies, etc., or just one type of tax return that covers all of them?
Can anyone advise me as to whether I should be a sole trader or a limited company?
The nature of my company would be that it would be like a record label, but for art as well as music, and it would only be my work that was being published. Is there a specific type of company that is best for such an operation? I have all the equipment I need and can operate from home so my overheards are very low and I won't have to borrow any money.
And can anyone shed any light onto the issue of business rates?
I understand that business premises attract business rates, a sort of business equivalent of council tax. My company will be based in the spare bedroom of my home. I understand that when a room in a residential property is used as a company's premises it attracts business rates while the rest of the property attracts council tax. However, I also understand that if the room isn't used exclusively for the business it doesn't attract business rates, but that any expenses relating to that room can't be offset. It seems like a grey area though.
Do I need to be VAT registered?
If I make a product which is sold in a shop and the shop adds VAT onto the price and pays be a cut of what they sell each unit for, do I need to be VAT registered or is it just the shop selling my product that needs to be VAT registered? This is causing me much confusion as I plan to sell my music through the iTunes store. Each track sells for 79p of which I receive 49p. There will be a VAT element in the price that iTunes sells for, but is an element of the 49p that I receive VAT or not?
As you can see, it's all very confusing! I don't expect the answers right here but if someone could point me towards the most likely source of the answers I need that would be great!! My main objective, over and above everything else, is that I know the basics so that someone from the Inland Revenue can't turn up demanding money that I should have paid them or send me to prison like a criminal when I've acutally just made a mistake! Basically I want to be able to sit down at the end of the day and feel confident that the proportion of my profit that I believe to be mine really is mine and that noone's going to turn up and take some of it off me after I've already done what I thought I needed to to meet my obligations to HM Treasury!
Can anyone reccomend a good, simple book, DVD or web site that explains how to fill-in a tax return and how business taxes work?
It needs to be very simple and not full of jargon! Are there different types of tax returns, ie, for people who aren't a company but need to declare some income, sole trader companies, limited companies, etc., or just one type of tax return that covers all of them?
Can anyone advise me as to whether I should be a sole trader or a limited company?
The nature of my company would be that it would be like a record label, but for art as well as music, and it would only be my work that was being published. Is there a specific type of company that is best for such an operation? I have all the equipment I need and can operate from home so my overheards are very low and I won't have to borrow any money.
And can anyone shed any light onto the issue of business rates?
I understand that business premises attract business rates, a sort of business equivalent of council tax. My company will be based in the spare bedroom of my home. I understand that when a room in a residential property is used as a company's premises it attracts business rates while the rest of the property attracts council tax. However, I also understand that if the room isn't used exclusively for the business it doesn't attract business rates, but that any expenses relating to that room can't be offset. It seems like a grey area though.
Do I need to be VAT registered?
If I make a product which is sold in a shop and the shop adds VAT onto the price and pays be a cut of what they sell each unit for, do I need to be VAT registered or is it just the shop selling my product that needs to be VAT registered? This is causing me much confusion as I plan to sell my music through the iTunes store. Each track sells for 79p of which I receive 49p. There will be a VAT element in the price that iTunes sells for, but is an element of the 49p that I receive VAT or not?
As you can see, it's all very confusing! I don't expect the answers right here but if someone could point me towards the most likely source of the answers I need that would be great!! My main objective, over and above everything else, is that I know the basics so that someone from the Inland Revenue can't turn up demanding money that I should have paid them or send me to prison like a criminal when I've acutally just made a mistake! Basically I want to be able to sit down at the end of the day and feel confident that the proportion of my profit that I believe to be mine really is mine and that noone's going to turn up and take some of it off me after I've already done what I thought I needed to to meet my obligations to HM Treasury!
Lloyds do a book for busines start ups which gives the basics of staus, tax, VAT, CT, employees etc.
My own advice would be to avoid the cost of premises unless you really need them as they are a cost you have to pay whether ypou earn a penny or not. A phone and PC in a bedroom do the same job as a phone and PC in a rented office office IMHO. Space for important meetings is easy to rent from local hotels and the like if you have to.
DONT FORGET TO TELL THE TAX MAN within 3 months or he will have your sorry arse!
We are now limited company but unless you honestly expect the business to be making decent money the extra cost and pain of LTD Company status probably isn't worth the benefits (limited liability if you own your own house, SOME (fewer and fewer) tax breaks).
I did the Business Link start up course, which was more about the nuts and bolts of status, tax, VAT etc than the SWOT/PEST and marketing stuff.
Keep an eye on ALL costs. Easy to forget to record costs like trips to the post office or to see the acountantant, odd stationery and refreshmnets when out on business.
I know we all think we will be millionaires when we start out, but don't spend like that is a guarantee, keep the VAT and tax money to one side to avoid spending it and ask youself when you spend whether you really HAVE to ( we can fool ourselves that we need the fancy car, top end gagets and impressive office but to be frank some of the best businesses I have seen started in a garage and some continue to work from there)! Rarely do we HAVE to arrive in a posh car (and if we do, we can hire).
A good accounant is a good first step: get one who is honest but firm with you. I know some will spend their time letting you sail close to the wind but frankly if I know who these people are HMRC will too!
Good luck.
My own advice would be to avoid the cost of premises unless you really need them as they are a cost you have to pay whether ypou earn a penny or not. A phone and PC in a bedroom do the same job as a phone and PC in a rented office office IMHO. Space for important meetings is easy to rent from local hotels and the like if you have to.
DONT FORGET TO TELL THE TAX MAN within 3 months or he will have your sorry arse!
We are now limited company but unless you honestly expect the business to be making decent money the extra cost and pain of LTD Company status probably isn't worth the benefits (limited liability if you own your own house, SOME (fewer and fewer) tax breaks).
I did the Business Link start up course, which was more about the nuts and bolts of status, tax, VAT etc than the SWOT/PEST and marketing stuff.
Keep an eye on ALL costs. Easy to forget to record costs like trips to the post office or to see the acountantant, odd stationery and refreshmnets when out on business.
I know we all think we will be millionaires when we start out, but don't spend like that is a guarantee, keep the VAT and tax money to one side to avoid spending it and ask youself when you spend whether you really HAVE to ( we can fool ourselves that we need the fancy car, top end gagets and impressive office but to be frank some of the best businesses I have seen started in a garage and some continue to work from there)! Rarely do we HAVE to arrive in a posh car (and if we do, we can hire).
A good accounant is a good first step: get one who is honest but firm with you. I know some will spend their time letting you sail close to the wind but frankly if I know who these people are HMRC will too!
Good luck.
Forgot to say, the VAT registration limit is about £70K now. Unless your customers are VAT registered or you have loads of VAT to reclaim on kit you have bought, there are advantages in staying below the statutory limit for registration. If you are selling CD's for £7 to individuals they can't reclaim the VAT and being registered will ad 17.5% to your prices . But if you are selling to a retailer they will be able to reclaim the VAT and it won't put them off buying.
Business rates? As long as you don't advertise the address, put signs up, have loads of visitors/deliveries or use the councils services such as trade waste disposal they won't bother you.
Business rates? As long as you don't advertise the address, put signs up, have loads of visitors/deliveries or use the councils services such as trade waste disposal they won't bother you.
Gassing Station | Business | Top of Page | What's New | My Stuff