It is the ambition of many people to run their own business. In recent years this dream has become a reality for some who have been made redundant, whilst others may decide to start up in business to be more independent and to obtain the full financial reward for their efforts.

One of the first major decisions you will have to make as you start your new business is the form of legal entity it will take.

The three main legal forms are sole trader, partnership or limited company.
Sole Trader
A sole trader is typically a business owned and operated by one individual. A sole proprietorship is perhaps the easiest form of business to own and operate because it does not require any specific legal organisation.

Partnership
In a partnership, two or more individuals join together to run the business enterprise. Each of the individual partners has ownership of company assets and responsibility for liabilities, as well as authority in running the business.

Limited Company
A limited company is a separate legal entity. A limited company has all of the legal rights of an individual and is responsible for its own debts. It must also file tax returns and pay taxes on income from its operations. Most importantly, the owners or shareholders of a limited company are protected from the liabilities of the business. The legal protection afforded the owners of a limited company can be useful.

There are a number of other things to consider; registering for Vat, employing staff and collecting paye tax, and perhaps most importantly setting up your bookkeeping systems to manage your business finances.

Here at CMA we can advise you on the best route go down when starting out in business. We can provide bookkeeping software free of charge to new customers and train them how to use this. If you would like to outsource this we can do you bookkeeping for you.

10 Top Tax Tips

1. Check Your Tax Code.
Most individuals pay their tax via PAYE. Your tax code determines how much tax you pay each week so make sure yours is correct so that your aren’t paying too much tax.

2. Business Mileage
If you incur business mileage as part of your job make sure you are claiming these back at the correct rate. The approved mileage rate increased to 45p per mile in April and if your employer reimburses at a lower rate then you can claim tax relief on the difference.

3. Other Business Expenses
There are some expenses that you can claim tax relief against if you don’t get them reimbursed. Good examples of these are teacher’s union subscriptions. These claims can be back dated for a number of years.

4. Consider Salary Sacrifice Schemes
There are a number of schemes available where employers could offer you a benefit other than a salary. These include child care vouchers and even a scheme to help you buy a bike. The benefit with these schemes is lower national insurance payments.

5. Company Cars
If you enjoy the benefit of a company car, consider a car with a CO2 emission below 75g/km. From 2011/12 there will be a tax rate of only 5% for cars with CO2 emissions of 75 g/km or less. Alternatively look at the option of a car allowance rather than the car itself.

6. Use your Pension
Pension contributions are exempt from tax. This means you can reduce your income tax by putting extra cash into your pension.

7. Rent a Room
If you are a home owner with a spare room you may be able to benefit from the rent a room scheme where you can receive up to £4,250 tax free.

8. Buy to Let Expenses
If you rent a property out remember to claim all your expenses incurred in connection with the property. This includes an allowance for mileage expenses visiting the property. If you make a loss on letting property, remember to offset it against future profits.

9. Self Employed and Working From Home
You can claim an allowance for expenses such as utilities, mortgage interest, insurance and telephones if you work from your residential home.

10. Choose Tax Efficient Savings
Simple steps like using up your ISA allowance can save considerable money.

Everyone likes to save money and it is surprising how few people actually take any steps to reduce their bills. However, if you take a pro-active approach to tax there is no reason why you can’t make significant savings.

Here at CMA will help both individuals and businesses stay on top of their finances.

Andy Hamer

Mark Brassington

Kathleen Goddard

Craig Green

Come along and visit our stand in the seminar room where we will be holding live demonstartion of the Xero Accountancy software.

The presentation will focus on how landlords can save tax by implemention the latest tax saving strategies for buy to let and HMO portfolio owners.