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Business potholes to avoid when starting a new business

Potholes to avoid with a new start-up

Business potholes to avoid when starting a new businessIn a recent post, we talked about five tax-saving tips you need to know if you’re starting a new venture, giving you valuable information whether you’re a seasoned start-up pro or completely new to the entrepreneurial world.

In this post, we take it a step further and focus on the potholes you’ll need to avoid to help your start-up flourish during the “growing pains” phase.

Avoid mixing your business and personal expenses

If you mix your business and personal expenses then it becomes far more difficult to keep track of them all. This can lead to you missing out on money that you could have otherwise claimed back.

Mixing business and personal expenses can also land you in trouble with HM Revenue and Customs (HMRC), as claiming business expenses as personal ones (or vice versa) are illegal.

For example, HMRC disagrees with the way many businesses deduct travel expenses from their taxable income. If this happens to you and if you want to bring a case against HMRC, you may end up paying more for the cost of litigation, so consider turning to a business accountant who can help you sort out your taxes at the first place.

Choose an appropriate legal structure

Depending on the size of your start-up, you can choose to set up as a sole trader, establish a partnership or register a limited company. The system and structure you choose will define the paperwork you’ll have to complete upon starting your business, the taxes you’ll be liable to pay, the manner in which profit can be taken out of your business, and your personal responsibilities should your business incur a loss.

There are also other rules to consider – if you need a licence or a permit, if you intend to sell goods or services online, or if you want to trade with EU countries. Discuss with an experienced small business accountant to get the appropriate advice.

Take advantage of tax reliefs and incentives

You should always apply for all the tax relief benefits and incentives available to you. At present, tax relief and incentives for business include Business rate reliefs, Enterprise Zones, Seed Enterprise Investment Scheme (SEIS), Employment Allowance, Annual Investment Allowance, Capital Allowances, Enterprise Investment Scheme, Venture Capital Trust Scheme, Capital Gains Roll-over Relief, Research and development tax credits, Patent Box, Social Investment tax relief, Creative Industries tax relief and Entrepreneur’s relief.  Discuss with your accountant and see if any tax reliefs are applicable to you.

Get help from an accountant

Frequent mistakes on VAT return, errors on tax forms, and years of making a loss are some of the reasons why HMRC may begin a tax investigation against you. Running a business without having a qualified accountant going through your books is also something that HMRC wants to verify. Get help right away from a business accountant because you may end up saving more time and money.

Experienced start-up accountants

To speak with the business start-up professionals at Tax Agility, get in touch today on 020 8108 0090, or use our contact page to arrange a complimentary, no obligation meeting.

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