• 19 April – PAYE must be paid for the period up to 5 April (usually just the March payroll) – and monthly on 19^th for each subsequent month
• 30 April – VAT Returns must be submitted and paid for quarter to 31 March (and 31 May for quarter to April etc)
• 6 May – Election day will decide who is going to use our taxes for the next few years
• 19 May – end of year P35 return must be submitted and any additional tax paid
• 31 May – give each employee a copy of their year end P60
• 4 July – American Independence Day
• 6 July – Benefit in Kind annual P11D return must be submitted and copies given to employees
• 14 July – Bastille Day in France, a good excuse for a bottle of wine and fireworks
• 19 July – Class 1A NIC paid to HMRC for P11D benefits
• 31 July – 2^nd payment on account of your 2009/10 tax bill
• 31 October – File your paper tax return (individuals and partnerships)
• 18 November – Beaujolais Nouveau wine released
• 31 January 2011 – File your tax return online (individuals and partnerships), make any final payment of 2009/10 tax and make a payment on account of 2010/11 tax if applicable .

In addition Limited companies will need to pay their tax and file accounts at Companies House 9 months from their year end, and file a corporation tax return 12 months from their year end.  Individuals do not forget you will need to advise the tax credits office of your income for last year separately despite being a part of HMRC as this will finalise your claim for the year.

We hope you find the contents of this blog useful; you should of course always seek professional advice for your specific needs.  Alastair Wood, AW Accounting – Accountants who “speak your language”

• Date registered at Companies House: The default date chosen is the end of the month one year from incorporation, so if you incorporated on 4 February 2010, your year end would automatically be 28 February 2011.  You can however change this.
• If you did not start trading through the business until May, you may want to change the year end to April so it represents a full years trade
• If you started on 4 February you might consider that your first year ended on 31 January and change it accordingly
• If you are involved in seasonal work (eg tourism) it would probably be easiest to have your year end in the off-season so that you have more time to complete the year end and also fewer transactions to split between the years
• If you have a year end which is not 31 March you have the ability to vote dividends in the most tax efficient way between the accounting years

There are some rules which limit how often you can change your year end and the maximum length:

• you may not extend a period so that it lasts more than 18 months
• you may not extend more than once in 5 years
• you may shorten an accounting reference period as often as you like
• full details available at Companies House

In reality therefore there are a number of reasons why your year end may not be the same as the tax year although at first sight this might seem the logical choice.  The notes above refer to Limited companies and while most sole traders and partnerships have March year ends some of the considerations are the same.

We hope you find the contents of this blog useful; you should of course always seek professional advice for your specific needs.  Alastair Wood, AW Accounting – Accountants who “speak your language”

1. If a big contract goes wrong, any liability (aside from any covered by insurance) is down to you personally, there is no limitation of liability
2. You are potentially paying tax on profits which have been retained in the company and you personally have not benefitted from
3. Even if you are drawing all of the profits you are still paying higher tax than as a limited company

While this would almost certainly be benficial for that business it also applies businesses making £20-£30k profits.  A limited company is not necessarily the dream answer however, some of the drawbacks are:

1. It is a more complicated and  structure
2. Consequently it will cost more to run
3. Other obligations include completing a corporation tax return within 12 months of the year end, sending accounts to companies House within 9 months and sending an Annual Return each anniversary of incorporation.
4. Even if you are the only employee you will have to maintain and run a PAYE system, pay any tax quarterly or monthly and submit an annual P35 Return by 19 May
5. There are legal obligations which you have as a director of the company

So how do you go about it?

1. Firstly you will have to decide on a name and see if it available at Companies House, it must be different to any other on the register and the rules are quite stringent on similar names (eg adding UK to a name)
2. For consistency make sure that any web address or trade mark is available if you want them  to be the same as the company name
3. Register the company at Companies House or get a professional such as your accountant to do it for you
4. Register the company for corporation tax and PAYE
5. If turnover is above or expected to be above the VAT limit, register for VAT too.  If you are transferring from an existing company you can retain the VAT number.  In some situations it may be beneficial to register even if you are under the limit
6. Advise all of your customers and suppliers of the name so that official paperwork is all issued in the new name, you may also have to revisit existing contracts
7. Record keeping should be completed regularly so you always know how the company is doing, you may well be doing this anyway as the business has grown

The details above may not include all of the issues you need to consider and you should seek professional advice which is appropriate to your situation before taking any action.

Alastair Wood, AW Accounting  “speaking your language”

Sole trader

This is the simplest way to work for yourself and there has been much discussion in recent months about people reverting back to sole trader status, or setting up as a sole trader in preference due to increasing company tax rates of which more later.  As a sole trader you pay tax on all of the profits you make in the business and for most small owner managed businesses there is tax of 20% and NI of 8% once a profit threshold of £6.5k and £5.7k respectively has been reached.  However once profits exceed £43k you become subject to higher rate tax at 40% on the excess although NI is then only 1%.  The NI rate is increasing by 0.5% in 2010/11 and a further 0.5% in the following year.  In addition to this you also have to pay an NI “stamp” of £2.40 per week.  This type of business is relatively simple to administer and a tax return is completed as a part of an individuals annual self assessment return.  The business is linked to the individual and they are personally responsible for any debts of the business.

Limited company

To take yourself one step away from this liability a limited company is an entity in its own right and any contracts are with the company not the owners (shareholders) or managers (directors), although they do have other responsibilities in statute.  A company is registered with Companies House and must send in accounts every year and also complete a tax return annually for submission to HMRC.  The company is taxed at 21% on all of its profits and this rate will not increase as expected next tax year (2010/11), and it is for this reason and the NI increases that I consider the pendulum is not swinging back to sole trader status as much as expected.  The people who work for the business are employees and are paid a salary, the shareholders however can be paid by way of salary and also dividend.  As the name implies shareholders hold shares and the percentage of ownership is then fixed, it is this percentage that defines the proportion of a dividend that they receive.  A dividend is paid to the shareholders as a payment for their investment in the business and this area should be considered carefully before setting up.

Partnerships

A simple partnership if effectively two or more sole traders working together sharing the profits of the business, however each one is liable for all of the business debts.  In recent years Limited liability partnerships have become available which are separate entities from the partners (called members) and allow limited liability similarly to limited companies.  For both types of partnership, the profits of the business are shared in line with a partnership agreement which should be written but may just be verbal.  This allows more flexibility than a company where the dividend is fixed by the number of shares held.  In a partnership the agreement can use different criteria (such as sales made) to split the profits between partners.  This is therefore a more flexible option.

This is only a brief summary of some of the differences between the options available which may help you to decide which is the best option for you, or indeed a pointer to ask more questions before setting up.  You should seek professional advice before proceeding but whatever you decide to do I hope you business is a great success.