Once you have set up your business, you will have to register for the collection and payment of various taxes. Here’s a very quick guide on what you need to watch out for.
If your business operates as sole trader or partnership, you will have to register for income tax. This is typically in addition to income tax you pay as an employee under the PAYE system. If your business is a limited company, you will need to register for corporation tax, which is a tax on the profits of a company
Value added tax (VAT)
VAT is a tax on goods and services. When the turnover of a business exceeds a certain amount (currently £70,000 in the UK), it is legally required to register. VAT is charged on sales and VAT on purchases can be deducted. Any surplus is paid to the tax authorities on a regular basis.
If you have employees, you need to register as an employer and collect PAYE and National Insurance from employees and also pay an employer’s National Insurance contribution. You should register when you have your first employee.
A good thing to do is look at the website of your tax authority. For example, HM Revenue & Customs provide simple guidelines for new businesses – see http://www.hmrc.gov.uk/businesses/iwtregister-a-new-business.shtml . Follow these guidelines and get your business registered sooner rather than later.