As a business owner, you have many responsibilities to keep your business compliant with all the necessary regulations. The most important is paying your taxes correctly and on time.
The body in charge of upholding tax regulations in the UK is His Majesty’s Revenue & Customs (HMRC). HMRC is responsible for making sure that businesses and individuals in the UK pay the right amount of tax at the right time. Failure to comply with HMRC’s tax regulations can result in financial penalties and even criminal prosecution.
Thankfully, the guidelines for HMRC compliance are clear and comprehensive. But it can still be a lot for businesses to get around. What applies to your business will depend on the type and size of your business, as well as your industry sector.
This article will give you an overview of what you need to do to stay compliant with HMRC when running a business in Oxfordshire—starting with getting set up and then tips on putting the right checks in place to minimise error.
Launching Your Business
Register your business
If you are a startup, the first step is to register your business. This begins with the Gov.uk website, where you would set up as a sole trader, limited company or partnership.
You will need to provide HMRC with your business name, address, contact details and type of business, including your ‘business structure’; sole traders, limited company, etc.
Get a tax reference number
Once you have registered your business, you will be provided with a Unique Tax Reference number (UTR).
UTRs are necessary for any business that wants to comply with HMRC’s tax regulations. They are used to identify businesses and help HMRC keep track of their tax obligations.
Set up a PAYE scheme
If you have employees, you will need to set up a PAYE scheme. This is a system that deducts taxes and National Insurance contributions (NICs) from your employees’ pay and then pays them to HMRC.
You can set up a PAYE scheme yourself through the Gov.uk website. However, it is advisable to use an accountant or payroll service to do this for you. This is because it can be a complex process, and you want to make sure that everything is done correctly.
Set up a Pension scheme
Again, if you have employees, you will most likely need to set up an Automatic Enrolment qualifying pension scheme, such as NEST.
File your tax return
Every year, you will need to file a tax return with HMRC. This is a self-assessment tax return for businesses in the UK.
Self employed individuals and partnerships can file their tax returns online through the Gov.uk website. You will need to provide HMRC with information about your business, such as your business name, address, contact details and type of business. Limited companies will need the support of an accountant in order that their accounts and tax returns are filed in the relevant digital format.
Pay your taxes
Once you have filed your tax return, you will need to pay any taxes that you owe.
You can pay your taxes by post however, it is advisable to pay online as this is the quickest and most efficient way to do it.
Implementing effective checks and balances
It’s one thing to say, “file and pay your taxes”, but the process of tracking is prone to human error. When you’re in the day-to-day operation of your business, updating spreadsheets or software can take the last place on your activities of priority.
Investing in quality bookkeeping services from the get-go will ensure that you not only avoid penalties for underpayment but can rest assured your affairs are up to date and compliant.
Our top 3 tips for keeping on top of your taxes are:
Keep accurate records of your income and expenditure
Setting aside a small amount of time regularly to keep records up to date will save you significant time down the track and minimise the chance of mistakes.
Use quality bookkeeping software to track your expenses
With bookkeeping and expense tracking software in place, half the job is done for you. That small time investment can simply be a check-up to make sure expenses are all in, and you’re back to your day-to-day work in no time.
Check in regularly with your accountant or tax advisor
Taxes are not to be filed flippantly. Your accountant adds the final checks and balances to ensure you’re compliant. They will also inform you of any changes in legislation and advise if there are opportunities to change the way your dividends are taxed or how you can claim for business expenses.
At The MGroup, we provide comprehensive tax and VAT services, including HMRC compliance. Our team are tax experts, able to negotiate with the HMRC on your behalf to handle any disputes and ensure you get the best outcomes for your business.
Contact us today to discuss how we can help you stay HMRC compliant and on top of your tax affairs for the best business tax outcomes in Oxfordshire.