The Tax year runs from 6th April of one year to 5th April of the following year for personal tax and 1st April to 31st March for corporation tax. Business year ends can happen at any time in the tax year they do not need to follow in line with the tax year nor do they need to run exactly one year from the start of a business. Once the business has set its year end and submitted the first tax return to HM Revenue And Customs (HMRC) and/or accounts to companies house you would not normally change it unless there were special reasons. There may be tax implications if you do change it.
Various businesses have different deadlines for the submission of returns and payment of taxes most of these have penalties for late filing and as a professional advisor your client would expect you to know these deadlines and give timely reminders to ensure they don’t inadvertently miss a deadline (some clients are always late no matter how often you remind them but as long as you remind them they can’t blame you later when they get a penalty!).
- Personal tax (for sole traders and partnerships and Limited Liability Partnerships (LLP)
if you are using a paper return – by 31 October,(or 3 months after the date that its issued, if that’s later
- if you are filing a return online – by 31 January,(or 3 months after the date that its issued, if that’s later).
Payment of tax is due 31st January following the end of the tax year.
Corporation tax for Limited companies
Tax return due by HMRC 12 Months after the end of the accounting year end and payment
of tax 9 months and 1 day after the end of the accounting year end. Accounts are due at companies house 9 months after the end of the accounting year end (or 22 months after incorporation for a newly incorporated company in its first year)
What are the different trading entities for businesses?
Probably the most informal business trading method and the cheapest to set up is a sole trader. To commence trading as a sole trader you simply need to inform HMRC that you have or are about to start trading and you can start in business you can do this online using the following link
Register as self employed
You are liable to Class 2 National Insurance from the date you start in a business (unless you qualify for an exemption) the reasons for exemption are:
- you are under 16
- you have reached State Pension age
- you’re a married woman or widow who is entitled to pay reduced contributions
- your earnings are below a certain threshold.
- you don’t have to pay Class 2 National Insurance contributions for any complete week when you can’t work due to illness or you’re caring for someone and are receiving certain benefits, but you may be able to get National Insurance credits instead. Credits can help maintain your National Insurance record and so protect your entitlement to the basic State Pension and certain other state benefits. In addition, you pay tax on profits and Class 4 National Insurance
The process is similar to the registration as a sole trader detailed above, taxes and National Insurance also works the same. Partnerships do not have a tax bill it’s the individual partners that are personally taxed on their percentage of the profits (this is beyond the scope of bookkeeping and is tax related so you will learn more about this if you choose to do the personal tax additional training).
This is a more formal business structure and there are costs associated with this. You must register with Companies House as a company first this can be carried out using a company formation agent.
Following registration of your company you must notify HMRC on form CT41G they should send this to the companies registered office but this can also be downloaded from their website HMRC
The Company is liable to Corporation Tax on its taxable profits
Limited Liability Partnership
This is in simple terms a mixture of a company and partnership. You need to register an LLP at companies house in the same way as a company and get the protection of limited liability status for debts incurred in the business but the partners are personally liable for taxes based on their percentage of the profits (just in the way a partnership is).
That was a basic insight into some of the areas of businesses you will need to be aware of as a bookkeeper.