What you need to know about tax as a business owner
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As a business owner it is important to be aware of your companies tax obligations and liabilities. There are a number of taxes that small businesses are required to pay. Below is our breakdown of the taxes you should know about as a business owner:
Corporation tax
If you are the owner of a limited company and your profit is above a set threshold it is likely that you are required to pay corporation tax. Corporation tax is self assessed- meaning that the company is required to calculate how much Corporation tax they owe. This should be paid nine months after the businesses tax year-end.
VAT
If your business sells products and services, then- depending on your company’s income- you may be required to start charging clients Value Added Tax (VAT). VAT is chargeable on the majority of products and services sold in the UK. VAT is usually charged at a rate of 20% of the price of the product or service.
National Insurance
If you employ staff then you are required to pay National Insurance Contributions (NIC). These payments should be made directly to the HMRC when you run payroll.
Income tax
If you are a sole trader, you are required to pay income tax based off of the income of your company. You must start paying income tax once your income exceeds the personal tax allowance.
Business rates
The business rates you are required to pay depend on the location of you company and the type of company you run. There work the same as council tax.