Top 10 FAQs: 1. What are my Obligations as a New Business Owner?

By Harriet FormbyFinance Tips, New on the blog

Top 10 Finance Questions Encountered By Every Entrepreneur: #1 What Are My Obligations As A Business Owner?

As a business owner, knowing how to manage your business finances, can feel overwhelming and scary. 

To help you get more comfort and confidence with what you should be doing for the best, I have collated the top 10 finance questions encountered by every entrepreneur to give you some simple and straightforward advice, tips and steps. So that you can feel less fearful and more in flow with your business finances – giving you more time and energy for bringing your ideas and creations to life.

For the first topic in this FAQ series we will look at: what exactly are your obligations as a business owner?

Whether you’ve just started out in business, or have been self employed for a while, you probably intended to enjoy a little more creativity, freedom and flow in your life.

But of course running your own business comes with just a few responsibilities…. And understanding what to do with your finance, taxes and keeping the authorities happy can feel hard and scary.

So let’s look at what you actually need to be on top of….

  • Firstly you need to let HMRC know that you are now self employed and register for self assessment which you can do here by 5 October after the tax year in which you became self employed and earned over £1,000.
  • Make a plan for filing your self assessment tax return by the deadline of 31 January and paying the tax due. If you are a sole trader you can actually do this yourself or find yourself a helpful accountant to support you.
  • Start keeping financial records of your business transactions, it’s a good idea to create a monthly finance routine to stay on top of it, maintain accuracy and of course maximise your tax deductibles. Check out a later tip where I’ll share more about this!

And there are some non-financial obligations:

  • Then other than financial reporting, you likely need appropriate business liability insurance in place. Check out a suitable business insurance broker or sometimes you can get this included with certain memberships.
  • And if you handle any personal data, you must register with the ICO who regulate GDPR:.

Also keep in mind that:

  • If you reach, or are projected to reach, £85,000 turnover in a 12 month period you must register for VAT, which also means charging VAT to your customers,  filing and paying VAT returns. There are also some valid reasons why you might wish to register for VAT before you reach the VAT threshold, particularly if your customers are typically VAT registered.
  • If you employ people you will need to register for PAYE, run a payroll and pay related taxes to HMRC. As an employer you would also have a duty of care to employees, including having employers liability insurance, following employment law and run a company pension scheme.

If you are set up as a limited company there are a few more obligations for you as a business owner:

Firstly it’s important to understand that there is a distinction between you and the company with each having their own responsibilities.
You as a director/shareholder of the company are therefore responsible for both your own obligations as a business owner and the company’s.

If you’re interested in understanding more about your legal and governance based responsibilities  as a director, you can also read more here 

Ultimately you therefore have to do much of the same things as a sole trader above but in additional you also must:

  • File an annual confirmation statement
  • File annual company accounts with Companies House
  • File a Corporation Tax Return with HMRC

You will need to work with an accountant to support you with these particular filings for a limited company.

 

WE ALSO HAVE A HANDY NEW BIZ CHECKLIST OF DREAMS!

 

GET IT HERE!

 

All of this can sounds like a lot to get to grips with if it’s all new or outside of your comfort zone!

So do reach out if you need more support, or ask away if you have any questions and I’m happy to help.

And for the next tip we will look at:

How to Effectively Manage Your Finances Each Month

Hi, I’m Harriet, your trusted Small Biz CFO, Business Growth Specialist, and Finance Educator.

I am the founder of Below The Line Finance and my mission is to financially empowering creative entrepreneurs to build aligned businesses  – with profit, purpose and healthy cashflows!  With my collaborative and supportive approach, I am dedicated to guiding you to greater confidence and success with your business finances. What could you accomplish with your very own Mini CFO?

Let’s stay in touch:

Together we can say goodbye to fear and confusion, build solid finance foundations and step into a supportive environment where you can turn your dreams into a reality through bespoke finance strategy.