Understanding Taxes as a Business Owner
Taxes work a little differently if you’re a business owner and it’s important to be aware of the details so you can stay compliant.
Often, business owners will seek the assistance of a financial expert to arrange these finances and ensure that you stay on top of your financial administration. Otherwise, you could face fines, sanctions and more serious investigations. Depends on the issue at hand. Tax evasion is a serious crime and is is regularly reported in the news , There are also wider issues with HMRC being accused of failing to investigate potential tax evasion. Factors such as having business premises or having employees can also determine the type of tax you pay.
As a business owner you have to pay many types of taxes. Here’s what you need to know.
Corporation tax
It is taxed based on the profits you make from your business. Currently, the corporation tax rate is 19% and is levied at the national level. However, there is small business relief available if you need it.
Income tax
It is applied on the basis of income or profits earned by individuals or institutions. It’s worth noting that you don’t have to pay tax on all types of income and there is income tax relief available if you qualify.
tub
Otherwise known as value added tax, VAT is added to most products and services sold by VAT-registered businesses. Businesses are required to register for VAT if their VAT-taxable turnover exceeds £85,000. However, there is an option to register if the turnover is less than £85,000.
business rates
Business rates may also be known as non-domestic rates. These are taxes on non-domestic properties, including shops, offices, warehouses, pubs and even holiday rental homes. It is important to check whether this applies to you and your business. Business rate requirements are different if your property is located in Scotland or Northern Ireland, so make sure you check.
capital gains
It is a tax levied on profits from the sale of non-inventory assets. This may be through the sale of stocks, bonds or assets. Think of it as a tax on any gain you make when you ‘dispose’ of an asset whose value has increased. Selling property would be an example of this.
Employees National Insurance Contribution
This is a Taxes on earnings and self-employment profits paid by employees, employers and the self-employed, The amount paid is determined by the employee’s National Insurance band sheet, as well as how much of the employee’s earnings falls within each band.
Remember to seek financial advice where possible to ensure you are meeting the correct tax requirements.