Deciding on what kind of business structure to utilise is the most significant choice to make while setting up your own business. You could choose to set up either of these, including a limited company, a partnership, or be a self-employed person.
There can be a few pros and cons to whichever you decide in terms of maintaining your business and there are dissimilarities in the tax payments as well. For instance, businesses pay corporations tax on the organization profits and as the owner (investor) you will pay income tax on your wages (through Pay As You Earn), and additionally on your profits (through Self-Assessment). Then again, if you are self-employed, you will pay income tax dependent on your taxable assets from your self-employment work.
On the off chance that you are uncertain about what kind of business structure to utilise, at that point you ought to consider getting professional guidance. A few businesses start as sole traders (self-employed) and become fully working for organizations as the business grows.
This guide centers around being self-employed. Therefore, detailed information on running a company is not within its scope. For additional information on setting up an organization (incorporation) see GOV.UK.
A partnership implies that the owners share duty regarding the business. Partnerships can either be formed officially utilizing a legal record called a Partnership Agreement or casually through a comprehension between at least two independently employed individuals. There is detailed guidance on GOV.UK about setting up partnerships. The partnership has been discussed in detail later on.
What business records do you have to keep?
Maintaining a satisfactory record of your business’s profits and costs is included amongst your responsibilities to the HMRC. This will help you make an accurate Self-Assessment tax return. The pattern which a business will utilize in setting up the accounting records is dependent upon the size and nature of the business. There is no standard set of rules to follow.
The records that you may require to maintain, will vary according to whether you utilise the accruals basis or cash basis. Furthermore, it is dependent on the period that you will need to maintain the business records for and the legal ramifications that you may face if the kept records are not sufficient.
There is a general guide to record-keeping, present on GOV.UK. The guide is categorized according to whether you are self-employed or are working as a registered contractor under the Construction Industry Scheme(CIS).
In case you are VAT registered or an employee, you may need to maintain additional records.