Self-employment in the UK offers the freedom to operate independently, often resulting in flexible hours, remote work options, and income potential driven by your efforts. However, it also brings responsibilities such as tax obligations and maintaining detailed records of income and expenses. This guide outlines everything you need to know to register, manage taxes, and claim expenses as a self-employed individual in the UK.

Step-by-step guide to registering as self-employed

10 Steps to register as self-employed with HMRC

To register as self-employed and set up a self-assessment tax return with HMRC, follow these steps:

1. Create a Government Gateway account on HMRC’s website
2. Wait for your Government Gateway ID to arrive
3. Log in to your account, select “add a tax,” then choose “self-assessment.”
4. Select your business structure: individual, sole trader, trust, or partnership
5. Enter the date you began self-employment
6. Provide your personal details
7. Include a brief description of your business activities
8. Review and submit your registration
9. Await your Unique Taxpayer Reference (UTR), which will arrive by post
10. Activate your UTR using the activation code sent within 10 working days

For those who have previously submitted a tax return, use the CWF1 form with your existing UTR.

When to register

Register with HMRC as soon as possible, but no later than 5th October following the end of the tax year in which you started your business. For example, if you began self-employment in June 2023, the registration deadline would be 5th October 2024.

Managing self-assessment tax returns

Understanding self-assessment

Self-employed individuals need to report income through a self-assessment tax return each year. This offsets income against allowable expenses and allowances, meaning you pay tax only on your taxable profit, not your entire income.

Key tax deadlines

• 31st October: Paper tax return submission
• 31st January: Online return and tax payment deadline for the previous tax year

To avoid penalties, maintain accurate records, and submit on time. Late submissions can result in fines, which increase over time if not resolved.

Self-assessment for new self-employed individuals

Newly self-employed individuals must complete a tax return if they earn more than £1,000 annually. Additionally, anyone earning from rental properties, commissions, tips, savings, investments, or dividends must also complete a return.

Filing your tax return

To complete your tax return, you will need:

• UTR (Unique Taxpayer Reference)
• NI (National Insurance) number
• Income and expense records
• P60 (if applicable)

What happens if you miss the deadline?

Missing the self-assessment deadline incurs penalties:

• £100 fine if missed by one day
• Up to £1,000 after three months
• Additional fines after six and twelve months

Claiming self-employed expenses

Allowable expenses

Allowable expenses are costs incurred by your business that are tax-deductible. Claiming these expenses reduces your taxable profit. Common categories include:

• Office expenses: Stationery, printing supplies, postage, and short-term software licences
• Travel expenses: Fuel, repairs, business travel, and accommodation. Personal travel, such as commuting, cannot be claimed
• Business premises expenses: Rent, utilities, maintenance, and security for office spaces
• Financial and legal expenses: Accountancy and legal fees, bank charges, and interest on loans. Fines and loan repayments are not deductible
• Staff costs: Salaries, bonuses, pension contributions, and training
• Marketing costs: Website fees, advertising, and promotional expenses
• Other costs: Uniforms, protective clothing, raw materials, and memberships in professional bodies

How to claim expenses

Keep records of all expenses throughout the tax year. Self-employed individuals can use either:

• Traditional accounting: Recording expenses as they’re incurred.
• Cash basis accounting: Recording expenses when they are paid.

When completing your return, you may enter a single expense figure or a detailed breakdown. Providing accurate records is essential, as HMRC may investigate discrepancies.

Key dates in the tax year

• 6th April: Start of the tax year
• 31st July: Second payment on account for previous year’s tax due
• 31st October: Paper tax return deadline
• 31st January: Online tax return and payment deadline

Tips for efficient tax management

1. File online: Filing online allows you to save progress and provides a simpler submission process.
2. Track income and expenses: Organise invoices, receipts, and records digitally to streamline the tax process.
3. Hire an accountant: Consider professional support to help with complex tax rules, optimise your tax position, and save time.

Ready to go self-employed?

Starting your self-employed journey is an exciting step, but it’s essential to stay on top of your financial responsibilities. Mint Formations can help streamline the registration process, ensuring you are set up as a sole trader or limited company with ease. Our accountancy services can also support your business by managing expenses, filing self-assessment returns, and ensuring compliance with HMRC. Get in touch with us today to start your self-employment journey with confidence!

The post Self-employment in the UK: A comprehensive guide appeared first on Mint Formations Blog.

But something a lot of people don’t think about when starting a business is the legal structure. While there are several options, most business owners choose to become a sole trader or a limited company. In the UK, there are 3.2 million sole traders and 2 million registered limited companies, so both structures are popular.

But choosing a business structure can be tricky, especially if it’s your first business. In this guide, we’ll examine the key differences between these two options. By understanding the pros and cons of both, you can make an informed decision about what’s best for you and your business.

The importance of choosing the right legal business structure

The legal structure of your business is likely to be one of the most important decisions you make if you choose to work for yourself and set up your own company. But what is the difference between being self-employed and trading as a limited company? And does this have any impact on the tax you pay?

You must decide on the correct structure for your business, as doing so incorrectly could land you a tax bill far greater than it should be. It will also affect your company registration. If you choose to be a sole trader, you only need to register with HMRC for self-assessment tax. But if you become a limited company, you’ll need to register your business with Companies House and HMRC for tax.

Whether or not you decide to trade as a sole trader or limited company will depend on various factors, including:

• Your tax affairs
• The ownership of your business
• Your plan for business expansion
• Liability
• Your target customers

Essentially, setting up a limited company means your company’s finances are completely separate from your own. If you are self-employed as a sole trader, you are financially liable for the success or failure of your business. This means that assets such as your savings, house and car are at risk if your business fails or you fall into debt and cannot keep up with payments.

But if you set up a limited company, you have limited liability. This means your finances are treated as entirely separate from your business’s. So, the corporate director of a limited company isn’t held personally responsible for the company’s financial failings.

What does it mean if you are self-employed or sole trader?

Being self-employed means you own your business and work for yourself. No one else owns your company, and you do not have shareholders or officers. Being self-employed means you’re in total control of your business. Self-employment is also known as being a sole trader or sole proprietor.

Your responsibilities as a sole trader include:

• Registering self-assessment tax returns
• Paying your tax by 31st January each year
• Keeping accurate records of your business’s sales and expenses
• Complying with HMRC’s VAT rules
• Choosing a business name that complies with HMRC’s rules.

Advantages of being a sole trader

First, registering as a sole trader means you have complete control over your business. You get to make all the decisions, from your products or services to how you run your operation. This can be liberating and empowering.

Secondly, as a sole trader, you get to keep all your business profits. This can be a significant advantage if your business is successful.

Higher taxation is often seen as a negative side to self-employment. But self-employed people have more freedom to extract profits from their business without immediate tax implications. The structure of a limited company restricts directors from doing this so easily.

Finally, sole traders often have lower overheads than larger businesses, which means they can be more profitable. All in all, being a sole trader can be a great way to build a successful business.

Disadvantages of being a sole trader

There are also some disadvantages to consider before deciding to go it alone as a sole trader. One of the main drawbacks of being a sole trader is that you are personally responsible for all of the debts and losses incurred by your business. If your company struggles financially or legal action is taken against you, you are personally liable and have to pay costs from your personal finances — unlike a limited company, which has limited liability protection.

If you make a profit as a self-employed person, you still have to pay tax like a limited company, but the amount you pay will differ. You will pay income tax as an individual rather than corporation tax as a company. You also have to pay class two and class four National Insurance as a self-employed individual — usually more than a limited company director.

As a sole trader, you may also find raising capital to grow your business challenging. You will need to convince potential investors and banks that you are a reasonable risk and that your business is legitimate.

Finally, you may have difficulty taking time off, as there will be no one else to cover for you if you need to take a holiday or take time off for other commitments.

Overall, being a sole trader can be a great way to start your own business, but it’s essential to be aware of the risks involved before taking the plunge.
Read our complete guide on how to register as self-employed.

What is a limited company?

A limited company is a separate legal entity from its shareholders and directors. If you are a self-employed sole trader, such as a freelancer, you are your business, and the two become one identity.

A limited company’s identity is separate from those who own and operate it, and the director cannot be held personally liable for the company’s financial failings. A director can, however, be held personally liable if they commit fraud or breach health and safety legislation.

The responsibilities of a limited company director include:

• Registering your business with Companies House
• Keeping accounting records
• Maintaining records and reporting company changes
• Paying corporation tax
• Filing an annual confirmation statement
• Keeping the company’s register of People with Significant Control (PSCs) up to date.

If you are the founder of a limited company, you don’t “own” the business. The ownership is based on shares and stakeholders. You can own a stake in a company — whether it’s 10% or 100% — and can hold a proportion of a company based on share ownership capital rights.

If you create a limited company, you are also not your own boss like a self-employed sole trader. Instead, you are a director or company officer, reporting to shareholders and stakeholders with interests within the company. If you are a managing director of a limited company, you also don’t have “employee” status and — by law — do not have automatic entitlements to benefits such as the national minimum wage.

A limited company has to pay tax on all its taxable profits. It pays Corporation Tax, which is far lower than personal Income Tax. However, all employees and directors must be signed up to PAYE and National Insurance contributions. Corporation Tax is charged at a rate of 19%. Company directors pay income tax based on their company salary.

To take advantage of limited company tax benefits, some directors choose to pay themselves a lower salary so they can leave profits in their business rather than paying tax on them. This also lowers National Insurance contributions. Directors can still pay themselves cash in the form of dividends should they wish to.

Advantages of being a limited company director

There are a lot of advantages to being a limited company director. For one thing, you have a lot of flexibility regarding how you structure your business. You can choose to have shareholders or be the sole shareholder. If you have shareholders, you can offer them different shares, such as equity or preference shares.

You also have a lot of control over your company. You get to decide who the directors are, the company’s name and where the registered office is. You also get to choose what sort of activities the company carries out.

One of the biggest advantages is that, as director, you’re not personally responsible for any debts or legal issues the company faces. So, if the company goes into debt, creditors can’t come after your personal assets to repay the debts.

Finally, being a limited company director can help improve your personal credit rating. This is because, as a director, you’re seen as more financially responsible than someone who isn’t a director. And having a good credit rating can help you get better deals on things like mortgages and loans.

Disadvantages of being a limited company director

There are also some disadvantages to consider before setting up a limited company. Firstly, limited companies tend to have more complex structures than sole proprietorships or partnerships, making them more expensive to set up and maintain.

Additionally, directors may have less control over the day-to-day operations of a limited company than they would in a sole proprietorship or partnership if you sell shares to investors in exchange for their capital. This means that, unlike in a sole proprietorship or partnership, you don’t own the company outright — the shareholders do. And as such, they have certain rights and powers regarding how the company is run.

Finally, limited companies must file annual financial reports with Companies House, which can be time-consuming and expensive. For the most part, limited companies hire accountants to handle this, which can be costly.

While there are some disadvantages to setting up a limited company, it’s still a great way to start a business, protect personal assets and manage risk.
Read our complete guide to setting up a limited company.

Self-employed vs limited company: The key differences explained

While we’ve covered what it means to be self-employed or a limited company and looked at their advantages and disadvantages, you might still be unsure which option is best for your business. If you’ve never run your own company, making such an important decision can be a bit daunting.

That’s why we’ve broken the differences down below. This makes it easy for you to see how your choice will affect how you run your business. Some of these have already been covered, but having them in one place is handy, so you can come back and find the differences easily.

Employment status

As a sole trader, your employment status is self-employed, which means you can’t be an employee of your business.

As a director of a limited company, you are an officer of the company, but that doesn’t automatically mean you’re an employee of the business. But when it comes to tax and national insurance contributions, most limited company directors are treated as employees.

Tax

Tax is a big difference between being a sole trader or a limited company. Sole trader tax is not hugely different from employee tax as you pay income tax on all your taxable profits. However, as a sole trader, you’ll pay both Class 2 and 4 National Insurance contributions rather than Class 1.

Limited company tax is a lot different. As a company, you will pay corporation tax on your taxable profits. As a company officer, you’ll also pay income tax and National Insurance in much the same way as an employee. Being a limited company is more tax efficient for business owners, and tax benefits and incentives are available.

VAT

Sole traders and limited companies have the same rules when it comes to VAT. If a business earns more than the £85,000 VAT threshold, it must register for VAT and charge it on its products or services if applicable.

Losses

Hopefully, you’ll never need to worry about losses, but here’s how they work if you do. As a sole trader, you can offset your losses against any other personal income. This is quite different for limited companies. Limited companies can offset trading losses against other company income, but directors cannot offset losses with personal income.

Borrowing

If you want to borrow money from your company as a sole trader, you’re free to do so. As there’s no legal distinction between you and your business, you’re free to borrow from your business bank account.

For limited companies, it’s a little more complicated. Directors are permitted to borrow from their company, but there are rules set out in the Companies Act 2006. These rules include a 32.5% tax charge if you do not repay the loan within nine months of year-end. We recommend speaking to a financial advisor or tax expert before borrowing from a limited company.

Pensions

Unfortunately, you are only eligible for a personal pension as a sole trader. Limited company directors have more pension options available. You are eligible to join your company pension scheme, which will probably be more generous than a personal pension.

Share Incentive Plans (SIPs) and Self-Administered Schemes (SAS) are also available to directors. It’s worth noting, though, that you’ll be responsible for ensuring any employees have the option of enrolling in your pension scheme.

Insolvency

Insolvency is another big difference between sole traders and limited companies. If your business fails as a sole trader, you are personally liable for its debts. This can put your personal assets at risk and can lead to bankruptcy.

As the director of a limited company, you have limited liability if your company fails. This means you’ll only need to pay the amount unpaid on your shares or if you’ve made a personal guarantee for any company borrowing. It’s important to note you may be personally liable if you continue trading when your company is insolvent.

Legal disputes

Legal disputes can arise for various reasons, and it’s essential to understand your legal liability. As a sole trader, you will face any legal disputes personally unless you have the appropriate insurance.

Most of the time, for limited companies, it’s the company that is legally liable and not the company director. But in cases where a director has committed fraud or specific offences, they may be personally responsible.

Accounts

As a sole trader, there’s no requirement for you to prepare tax accounts unless you are registered for VAT. For obvious reasons, keeping accurate accounts as a sole trader is a good idea, as you’ll still need to file your self-assessment tax return.

Limited companies are required to prepare annual accounts under the provisions of the Companies Act 2006. These accounts must be prepared per accounting standards and submitted online. If you’re a limited company, we’d recommend hiring an accountant to handle your accounts.

Expenses

Expenses are a great way to offset your expenditure and ensure you pay the right amount of tax. As a sole trader, you can claim expenses used exclusively for your business. You can also claim a percentage of an expense related to your business, such as household bills if you work from home.

For limited companies, expenses work in much the same way. A company can claim expenses if they are solely for the business. If a director incurs private expenses through the company, they can be considered earnings.

Moving from Self-employed to a limited company

As you can see, there’s a lot to consider when you start a business and choose a legal structure. The good news is that although it’s an important decision, it’s not set in stone. If you decide to start your business as a sole trader, there’s nothing to stop you from becoming a limited company later. In fact, this is a route many business owners choose.

Many business owners start as sole traders and set up a limited company once they’ve grown the business. Switching from sole trader to a limited company is quick and easy, especially if you use the services of a formations agent.

Are you planning to become a sole trader or limited company? Mint Formations can help you set up as a sole trader or register a limited company– compare the company formation packages we offer. If you have questions about starting your business, contact the Mint Formations team today. 

The post Self-employed vs limited company: What are the differences between being self-employed and trading as a limited company? appeared first on Mint Formations Blog.

A Unique taxpayer reference (UTR) is a 10-digit code issued by HMRC to identify individuals and businesses for tax purposes. It’s crucial for anyone filing a self-assessment tax return or paying corporation tax as a limited company. This identifier is unique to you or your business and is used in all communications with HMRC regarding your tax obligations.

Who needs a UTR number?

• Self-employed individuals: If you are a sole trader, contractor, or freelancer, you must have a UTR number to file self-assessment tax returns.
• Limited companies: Each company is issued its own UTR by HMRC for corporation tax.
• Partnerships: Partners must have their own UTR numbers to report earnings from the business.
• Anyone with non-PAYE income: If you earn income outside of traditional employment (e.g., from rental properties or investments), a UTR is necessary for tax purposes.

Why is a UTR number important?

UTR numbers for self-employed Individuals:

• You will automatically receive a UTR number after registering for self-assessment with HMRC.
• Registration can be done online, and HMRC will send the UTR number to your registered address.

UTR numbers for limited companies:

• When you register your company with Companies House, HMRC will automatically generate a UTR for the company. This is typically sent to your registered office address within 14 days of incorporation.

If you wish to obtain a UTR number without being self-employed or running a limited company, you will need to contact HMRC directly via phone or post.

How long does it take to get a UTR number?

The process of receiving a UTR number is usually automatic once you register for self-assessment or form a limited company. The UTR should arrive within 10 to 14 working days. If there are delays, contacting HMRC directly may expedite the process.

What happens if I don’t have a UTR number?

Operating without a UTR number is considered tax evasion in the UK, which is a serious offence. If you are self-employed or run a limited company without registering and receiving a UTR number, you risk facing penalties, back payments, or even legal prosecution.

If you’ve already started earning income as a self-employed individual or limited company but have not registered for a UTR, notify HMRC immediately to avoid penalties for unreported income.

How do I find my UTR number?

If you’ve lost your UTR number, don’t worry—there are several ways to retrieve it:

1. HMRC correspondence: Your UTR will appear on official letters from HMRC, such as tax return forms, payment reminders, and confirmation letters.
2. HMRC online portal: You can log into the government gateway and find your UTR number in the account summary under the self-assessment section.
3. Contact HMRC: If you cannot locate your UTR in correspondence or online, contact HMRC directly. They will send the number to your registered address.

Can you change your UTR number?

Once a UTR number has been issued, it cannot be changed. It remains tied to your personal tax history or your company’s tax records. Even if you de-register and re-register for self-employment or dissolve and reform a company, the same UTR number will be used. The only exception to this rule is if you declare bankruptcy, in which case you will be issued a new UTR number.

What happens if I lose my UTR number?

If you misplace your UTR number, simply refer to any official correspondence from HMRC. Your UTR is always present on tax returns and payment reminders. You can also access it via your online self-assessment account through the government gateway. If all else fails, contact HMRC for assistance in retrieving your UTR.

UTR numbers: In summary

A UTR number is a crucial identifier for individuals and businesses in the UK tax system. Whether you’re self-employed or running a limited company, having a UTR ensures your tax filings are correctly tracked by HMRC. Losing your UTR can cause significant headaches, but recovering it is straightforward through HMRC correspondence or online access. Remember, once issued, your UTR remains unchanged unless you declare bankruptcy.

Ready to get started? Register your company with Mint Formations and secure your UTR number quickly and hassle-free. Our range of company formation packages will help you launch your business smoothly. If you’ve already got your UTR and need financial advice, our accountancy support services are here to help and guide you.

The post UTR Numbers : A complete guide appeared first on Mint Formations Blog.

However, starting a business can be a busy time, and the admin work, such as searching for a registered office address provider or hiring new staff, quickly piles up. Trying to wade through figures and fees to select the best bank for your business account can be overwhelming and is just another job to do.

If you’re feeling stuck, keep reading, as we’ve summarised the data from nine UK banks below so you can compare the numbers and decide what works best for your company and individual finances.

Best business banking accounts

Whether you’re looking for the best business bank account for sole traders or one with a long free-banking period, we’ve done the leg work so you don’t have to. Here’s everything you need to know:

HSBC

Starting your business with HSBC will give you free banking for the first 12 months. So, you’ll pay no maintenance fees or payments if standard charges cover your account. You can choose a business current account that offers electronic banking or small business tariffs that suit your business banking practice.

Santander

With Santander, you can choose between a Business Current Account and a 1|2|3 Business Current Account. However, you can currently only open a business account if you’re an existing customer.

The main advantage of the 1|2|3 account is the cashback feature, where the rate of your received cash back depends on the amount you deposit into your account each year. This rate varies between 1, 2 or 3%. Santander will pay this cashback on the first £10,000 deposited into your account during the year.

TSB

TSB provides 30 months of free business banking for sole traders and limited companies. TSB supplies a free Square reader with each business account, and there are no fees to pay on your first £1,000 of sales.

Natwest/RBS

Natwest offers business owners a choice between its “Startup” and “Business” accounts.

The Startup account is open to companies that have been trading for less than 12 months and have a turnover of less than £1 million. This account offers free banking for 24 months before your business shifts to the Standard Published Tariff.

The Business account is for companies trading for over a year with a turnover of up to £2 million. Its benefits include services such as FreeAgent accounting and Business Boost and a dedicated Relationship Manager.

Lloyds/Bank of Scotland

New businesses with an expected turnover of less than £3 million receive 12 months of free day-to-day banking with the Business Current Account from Lloyds and Bank of Scotland.

All business accounts have free electronic payments and a simple pricing structure. Beneficial products like business loans, insurance, overdrafts and charge cards offer additional support.

Barclays

Barclays offers both startup and standard business accounts. With its startup business account, you’ll receive free banking for 12 months. Your business will also benefit from the expert advice of Barclays’ Business Direct team to support and help you grow during the initial months. Barclay’s team will help you outline your business strategy and cash flow management and guide you through international lending and trading.

Virgin money

Yorkshire Bank and Clydesdale Bank have been brought together under the Virgin brand.

They provide a healthy free banking period of 25 months, covering free day-to-day banking for startups and those switching accounts. Your business must have a turnover of less than £6.5 million with an annual cash transaction limit of £250,000.

Monzo

Unlike other business bank accounts, Monzo boasts no account fees on their lite tariff. For larger businesses or those wanting to access more features such as tax pots, integrated accounting, invoicing and multi-user access, it’s a small fee of £5 per month for Business Pro.

Metro bank

Metro Bank has a specialist account for startups and SMEs who have a turnover under £2 million, as well as for larger, experienced businesses.

If you maintain a balance above £6,000 for the whole month, Metro Bank will waive your monthly account maintenance fee. Otherwise, it’s a monthly fee of £6. If you stay above £6,000, you’ll get 30 fee-free UK transactions a month, with 30p per transaction for amounts above that figure. Accounts that go under £6,000 will pay 30p per UK transaction.

Once you’ve selected the best business bank account for your company, you need certain key documents to apply. These documents include proof of identity and address. You’ll also need your Companies House registration number (if you have one), financial information, and full details of company directors and partners.

To find out more about the best business bank account in the UK and to receive expert advice and guidance, contact Mint Formations today.

The post The 9 best business bank accounts in the UK appeared first on Mint Formations Blog.

According to research, people develop solid impressions just seven seconds after an encounter, and it may just take one-tenth of a second to determine traits such as trustworthiness. With this in mind, it’s clear how powerful good branding can be and the importance of a good first impression.

In this guide, we’ll look at how to build a brand that conveys the essence of your business and helps you build meaningful connections with your customers.

What Is brand identity?

To put it simply, your brand is the big picture. It’s your visual assets, stylistic choices and tone used in your messaging — it’s all the things that impact the way your brand is seen by your target audience. It tells your customers who you are straight away and differentiates you from your competitors.

How to build your brand

Do your research

Your first step on your branding journey is to do your research. Find out things like who your target audience is and their unique pain points. Learn who your competitors are and look at what they’re doing. Is it working, or does it need to be improved?

Here are some easy research methods which will help inform your branding strategy:

1. Google your product or service: take a look at who is ranking in this space; these are likely to be some of your direct competitors.
2. Take a look at competitors’ social media accounts: how do they communicate with the audience? What kind of responses are they getting?
3. Look at subreddits for competitors: looking at forums such as Reddit is a great way to identify pain points if you’re launching a similar product. Use this to research how customers talk about the product and their feelings toward it. Can you make it better?
4. Create buyer personas of your ideal customer: get specific and include things like age, occupation, family and education. Keep these personas in mind every time you communicate with your audience.

Establish your brand positioning

Once you’ve done your research, it’s time to consider how you’re going to enter the market. Begin by creating a positioning statement that’s one or two lines that detail who you are and what you’re doing. It doesn’t have to be fancy, and it may be something as simple as: “We’re a hairdressing company offering affordable haircuts in [x].”

When creating your statement, think about how you’re going to stand out against your competitors. What are your USPs? Why are customers going to choose you over their competitors? This will help to inform your personality and tone of voice. For example, “affordable” in the statement above would make your messaging more friendly and approachable. Whereas if you were offering “luxury” haircuts, you’d use more sophisticated language.

Choose your business name

Now you’re equipped with the knowledge of who your audience is and your unique market position, you’ll need to decide on a business name. The right name should tell your customer who you are, so make sure you choose something memorable that will invoke the right emotions.

To help you get started, there are a few different types of business names you can choose from:

• Descriptive: include words that describe the business.
• Emotive: inspire emotional responses.
• Compound: combine words together, such as “Facebook”.
• Origin: names of where the business started or who created it.
• Initials and acronyms: easy to remember and catchy, BMW is a great example.
• Made-up words: words that mean nothing but sound great, for example, Adidas.

Create a list of names you like the sound of, and then use our name checker tool to see if they’re available to register with Companies House. You should also check the domain using a company like GoDaddy to see if it’s free and how much it costs to buy.

Write your tagline

Your slogan should be brief enough to fit into smaller spaces like bios and ads yet be descriptive enough to tell customers exactly who you are. Make it easy to remember and make sure it fits in with the rest of your brand.

Your slogan could be things like:

• A metaphor
• An attitude
• Description of what you do
• A key benefit
• Catchy saying.

Your tagline doesn’t have to be set in stone; it can change as much as you need. Coca-Cola has undergone 45 slogan changes over the years to evolve with the times. Their first ever tagline in 1886 was simply “Drink Coca-Cola”, and the latest is now “Real Magic”.

Choose your brand’s look

Now it’s time for the fun part — building your brand and choosing your look. It is vital to get this down before you start creating your website and setting up any social media accounts.

Colours

When choosing your colours, you should always make sure they’re different from your competitors, as you don’t want to make things confusing. It may even be a good idea to choose something completely different and contrasting so you really stand out.

But did you know that aside from making you stand out, colours can portray a feeling? This unique science is known as colour psychology, and it’s really quite powerful. Here are the meanings behind certain colours:

• Yellow: optimistic and warm.
• Orange: cheerful and confident.
• Red: exciting and passionate.
• Purple: creative and smart.
• Blue: trustworthy and strong.
• Green: healthy and peaceful.
• Black/White/Grey: balanced and calm.

If you’re starting a business that sells camping gear, you may want to pick green for the peaceful connotations. Whereas if you’re starting a spa, you may wish to choose white for your branding to take advantage of the feelings of calm and balance.

Fonts

Fonts are often an overlooked part of building a brand, but they can communicate your personality just as well as images. For example, bold styles can communicate strength, serif brings feelings of authority and script fonts are generally construed as being playful.

Don’t make things confusing and choose lots of fonts; instead, pick one for the body and another for the header, making sure that they complement each other.

Create your logo

Think of your logo as the face of your business. It’s the first thing customers will see when they encounter your brand, so be sure to make it stand out. It should be completely unique so your audience can tell it’s you at a quick glance. It will also need to work at all sizes as your logo will be present on your website, social media profiles, favicon and potentially your product packaging, too.

There are several different types of logos to choose from, some of the most popular ones being:

• Abstract: shapes and colours rather than meaning.
• Mascot: a person’s face or animal; this can humanise your business.
• Emblem: usually circular and combines text with imagery.
• Lettermark: symbol from one or more letters of a brand name.
• Icon: a visual representation of the brand.
• Wordmark: just the name of the brand.
• Combination: may include a mix of two mediums, such as text with an icon.

Integrate your brand into your business

Once you’ve finalised how you want your brand to look and feel, it’s time to integrate your brand into your business. Start by creating a style guide, as this will help to ensure your voice and presence are consistent throughout. Make sure you include how you want your brand to look and feel, and remember that your personality should shine through in every word, image and post.

Monitor and learn

There’s a possibility that you won’t get your branding right on the first try, and that’s okay. Monitor how your brand performs and gather feedback from your customers about how they feel about your brand — and don’t be afraid to change things if it’s not working. Logos can be changed, taglines rewritten, and colour schemes reworked. Your brand shouldn’t be static; it should be relevant and evolve with your business and the times.

Ready to get started with your new business? Register your company with Mint Formations today and get your new venture off to the best possible start. If you have any questions, please get in touch with our team, and we’ll be happy to help.

The post From concept to creation: A step-by-step guide to creating a brand in the UK appeared first on Mint Formations Blog.

Where the appeal of working for yourself is easy to see, figuring out what business you should start can be tricky. In this guide, we look at the key considerations you need to consider and provide some ideas for businesses you can start quickly.

6 Considerations before choosing a business idea

Picking a business idea should take careful consideration, and it’s not something you should rush into. Before getting started with the brainstorming phase, consider the following:

Will you need any training?

To make your life easier, choose something you already have experience in or at least are passionate about. Consider whether you already have the knowledge to get started or if you’ll need to undertake further qualifications. Ideas that require less training will be easier and less costly to launch. 

How much will it cost to set up?

Next, you need to consider how much you’re prepared to pay to set up your business. Make a list of what you’ll need to get started, perhaps a website? Desk and workstation? These costs can add up quite quickly.

Do you need inventory or supplies?

If you’re going to be selling physical goods, you’ll need some form of supply or inventory before launch. Depending on what you intend to make or sell, these costs can be quite considerable. At first, making or purchasing small batches may be a good idea until you start to see a profit.

Where will you be working?

Would you prefer to work from home, or do you need to think about renting an office or workshop? If your work will take you out of home, consider transport costs and how far you’re willing to travel. 

Is there demand for your business?

Demand is what will influence whether your business soars or plummets. This is perhaps the most important thing to consider when thinking about what business you can start. Spend time researching your idea and the area where you intend to market it.

Do you have something new to offer?

Have you got a completely new product or service that no one else has yet? Or maybe you or someone you know had a bad experience with a company and know that you can do better? You need to make sure you’re doing something different to your competition.

What business should I start?

The key to a successful business is working out what you’re good at and finding your niche. It’s helpful at this stage to list your qualifications and key skills and consider whether they lend themselves particularly well to certain careers.

If you’re struggling for inspiration, we’ve rounded up some ideas for small businesses that you can get started with little or no set-up fees.

Practical small business ideas

Handyman

Can you fix just about anything you put your hands on? Then, a handyman business may work for you. Start-up costs are small, you’ll need to create a website, do some market research to determine how much to charge, and buy tools if needed. 

The good news is you won’t need any special education for this job, but it is a good idea only to offer services that you’re skilled enough to perform. Also, don’t forget to take out insurance so that you’re covered in case something goes wrong. 

Landscaper/Gardener

If you have a bit of a green thumb and enjoy gardening, landscaping can be a very lucrative business. Around 87% of British homes have a garden, and lifestyles are often too busy to mow lawns and trim trees regularly. 

Consider starting small by providing straightforward services such as lawn mowing and weeding, and you can then build up your offering to more technical tasks. You could even undertake a landscaping course later on to gain more experience. 

To get started, you’ll just need tools and suitable clothing. You’ll also need a car with enough space to take tools from job to job if you’re using your own.

Cleaner

Cleaning businesses are booming, and according to research conducted by The British Cleaning Council (BCC), one in ten homes now employ a domestic cleaner. It’s very easy to get started with this type of business, and you can do it alone as a sole trader while you build up a client base. You could offer specialist services, such as deep spring cleans and end-of-tenancy cleaning, to set your business apart. 

Before getting started, carry out some market research to figure out the going rate for your area. Then, once you’re ready to get your business out there, print flyers, post them through the doors of your area and post your services to local Facebook groups. You’ll find that word of mouth is a very powerful marketing tool when you’re established.

Start-up costs are very low. You’ll need cleaning materials and potentially transport if you intend to work beyond your immediate area. 

Car detailer

If you’d prefer to take your cleaning services on the road, why not consider opening a car wash or detailing service? You could choose to carry out mobile services or rent a location to offer cleaning. We’d recommend researching before renting somewhere to determine whether there’s more demand for mobile car detailing in your area. Who knows? Maybe you’ll be the first.

You don’t need professional qualifications to open a car detailing business, and start-up costs are minimal as you’ll just need cleaning supplies.

Pet and house sitter

Over half of UK households own a pet, and most will need to hire someone to care for them when they go away. Pet sitting services are fast becoming a more popular alternative to catteries and kennels as they’re far less stressful for pets and owners alike. 

With this type of business, you’ll likely go to the client’s home and stay for an agreed-upon period. Tasks will include general pet care, and there may be added home chores on top, such as watering plants and putting bins out.

You don’t need qualifications to get started, but it’s a good idea to take a pet first aid course as a minimum, and, as you’ll be in private residences, a DBS check will often be requested, too. Additionally, make sure that you take out appropriate insurance. 

Home-based business ideas

Online tutor

Ever since the pandemic, there’s been an increase in demand for quality online education. It’s a highly convenient way to teach and learn, as everything is done online, so there’s no overheads for travel or classroom hire. Also, you can expand your client base and teach worldwide. 

Where you need qualified teacher status (QTS) to teach at primary and secondary level, you don’t need this for further education or early years. However, you should only teach subjects you have a thorough understanding of and in some cases, a degree in the field may make you more hireable. 

If you’re not adept at a specific topic, consider teaching English as a foreign language to students overseas. You will need a TEFL qualification, but training courses are very affordable.

Consultant

If you’re a marketing mogul, social media whizz or SEO specialist, becoming a consultant for other businesses could be a great option. With this career, it’s helpful to have contacts in the industry before getting started and make sure you spend some time developing a thorough marketing plan to attract more clients. 

Your time is your biggest investment with this career model, but you’ll also need a website and subscriptions to any tools you need to carry out your work.

Dropshipper

Dropshipping is one of the most straightforward businesses to get started, and with the average dropshipper making £2,000 a month, it can be a good source of income when done right. It’s relatively low-cost and hands-off as it involves third-party suppliers shipping products to customers on your behalf. 

You won’t need to store or handle products; you only need to find a niche and curate products from quality suppliers in your online shop. You’ll have to handle your own marketing and customer service, so it’s vital you work with trustworthy suppliers.

Dropshipping is also a great way to test the waters with certain products before spending time and money launching an original offering.

Freelancer

If you have experience in creative or tech industries, why not turn your skills into a small business and go freelance? As of 2022, there are 1.9 million freelancers in the UK alone, making up almost half of the solo self-employed population. 

There are plenty of careers you can take freelance, including writing-based professions like journalism, copywriting, and even authoring. A good grasp of English and impeccable spelling and grammar skills are essential, and in some cases, it may make you more of an asset if you possess an English degree. 

If you’re more technologically inclined, web development could be a good option. You’ll need to be well-versed in coding languages such as HTML, CSS and Javascript, but no formal qualifications are needed. You can even take boot camp courses to learn the fundamentals.

Crafter

Maybe you’re a baker or, perhaps, a candlestick maker? Whatever your talent or craft, you can market it and create a unique small business idea. For example, the UK candle business is currently valued at a sizeable £1.9bn, so there’s certainly demand for quality, artisanal goods. 

Start with creating small batches or even making items to order. This way, it can be done at home and requires little start-up cost while you gauge demand. Try selling products on Etsy initially, and once you build a reputation, you can build your website and sell products using e-commerce platforms like Shopify. 

Things to consider when selling homemade goods are shipping, inventory management, and the time it takes to make things. Additionally, if you intend to create products to put on the skin, you’ll need to bear regulations in mind, too.

Final tips for starting your new business

• Find your niche: Good marketing can make or break a business, so you need to ensure there’s a demand and, if competition exists, you can do it better.
• Price carefully: Pricing isn’t as simple as making your products cheaper than the competition. If prices are too low, you’ll risk customers thinking your products are inferior, whereas if they’re too high, they’ll likely shop elsewhere.
• Don’t forget shipping fees: If you’re selling physical products, you’ll need to consider shipping costs on both your and the customer’s end. You may want to include these costs in the item’s price and offer free shipping as a USP or create promotions to encourage customers to spend over a certain amount to qualify for free shipping.
• Always be learning: Starting a new business is a learning curve, so be prepared to learn and adapt. Products may need to be swapped, ingredients might have to be changed, websites may have to be redesigned, and prices might need to be reconsidered. Take the time to review your performance and think about how you can do better.

Ready to get started? Register your small business with Mint Formations today and get off to a flying start. We offer comprehensive company formation packages designed to take the stress out of beginning your new journey. 

The post What business should I start? A straightforward guide to finding your niche in the UK market appeared first on Mint Formations Blog.

Your business structure is one of the first things you’ll need to work out together. Naturally, you might be inclined to choose a partnership structure, but the UK has three main business structures. Sole traders are the most popular structure, with 56% of UK businesses being sole proprietorships and limited companies not too far behind with 37%. Surprisingly, business partnerships only make up 7% of UK businesses. 

Each structure has distinct advantages and disadvantages, and it can be tricky to determine which is right for your business. Luckily for you, Mint Formations have got you covered. 

We’ve compiled this complete guide to business partnerships so you can decide if it’s the best option. It has everything you need to know, including an overview of business partnerships, different types of partnerships and their pros and cons. Plus, we’ve included a step-by-step guide on how to set up a business partnership. 

Ready to get stuck in? 

What is a business partnership?

Put simply, a business partnership in the UK is a legal business structure where two or more people set up a business and run it together. Usually, each partner will invest money, contribute industry knowledge and skills, as well as share the business’ profits and losses. 

Partnerships are often formed to combine skill sets and resources to bring a business idea to life. By combining experience and expertise, partners can build a business that is stronger than if they started alone. 

Types of business partnership

There are three types of business partnerships in the UK, general, limited and limited liability partnerships. Here’s a quick overview of each of them: 

General partnership

A general or ordinary partnership is the most common form of partnership, where two or more partners come together to form and run a business. Generally, each partner shares responsibility for the management and finances of the business and shares profits and losses equally unless the partnership agreement states otherwise. 

In a general partnership, each partner has unlimited personal liability for any business debts or obligations. This means that if the business cannot pay its debts or is sued by a customer, the partners’ personal assets can be used for payment. A general partnership is not a separate legal entity, meaning each partner must pay income tax and National Insurance contributions individually through HMRC’s self-assessment tax. 

Limited partnership (LP)

Limited partnerships work similarly to general partnerships but give some partners more protection in terms of liability. In a limited partnership, there are two types of partners, general partners and limited partners, which have the following distinctions:

• General partners have the same liability as in a general partnership — for example, unlimited personal liability. 
• Limited partners have limited liability and are only liable for the amount they invest in the business.
  

As with a general partnership, each partner pays tax and National Insurance contributions individually. 

Limited liability partnership (LLP)

Despite the name, limited liability partnerships are not technically a partnership. LLPs are more of a hybrid between a partnership and a limited company. In an LLP, each partner has limited liability for any business debts or obligations, and the business is taxed as a separate legal entity. LLPs require a nominated partner to complete and submit the company tax return to HMRC.

While the business is taxed separately, partners must file their own tax returns and pay income tax and National Insurance contributions individually. 

Advantages of forming a business partnership

When choosing your business structure, it’s essential to understand the benefits of starting one form of business over another. Why form a partnership when you could start a limited company? The good news is that a business partnership offers you and your partners many advantages. 

Let’s highlight some of the most significant benefits of setting up a partnership. 

Shared workload and responsibilities

When you start a business on your own, you’ll be solely responsible for the running of the business. That means you’ll need to take on every task and responsibility yourself. You’ll be accountable for everything from accounts, marketing and sales to product development and customer service. Even if you outsource some of the work, you’ll still need to research who to work with and manage it. 

All in all, it’s a lot of work. 

But if you start a business with a partner, you can share the workload and divide responsibilities. This can be a big help for both you and your business. By sharing the load, you can be more productive, less stressed and avoid burnout. 

Shared financial resources

Unsurprisingly, starting a business can be an expensive endeavour. In the early stages of any business, investment is required to get it off the ground. In the UK, the average cost of starting a business is £5000, so even if you’re running a business with relatively low overheads, you’ll still need some capital to start. Unfortunately, not everyone has the financial resources to do this alone. 

This is where partnerships really shine. By forming a business partnership, you can pool your financial resources and invest more in the business. Having more money available when you start your business gives you more opportunities to grow and increases your chance of success. Plus, you can share the financial risk, which is particularly beneficial for new start-ups. 

Different skill sets and expertise

Running a business requires a wide range of skills if you want your company to succeed. Beyond providing top-notch products and services to your customers, you’ll need to handle finances, marketing and operations. That’s a lot to handle on your own. 

The good news is that everyone has a unique set of skills, and by forming a partnership, you can make the most of each other’s skill sets. Say, for example, you’ve got extensive knowledge about marketing and branding, but you’ve not had much experience handling business management and finances. You can partner with some with skills in those areas. Combining your talents and expertise allows you to set yourself up for success rather than spreading yourself too thin. 

Ability to take On larger projects

As a business owner, the last thing you want to do is miss out on opportunities. But one of the biggest obstacles when you run a business on your own is the workload. Company founders often spend between 60 and 100 hours working when they’re starting a business to ensure the company succeeds.

But when you’ve only got one set of hands, you can easily miss out on significant opportunities by not having the capacity to handle them. By combining your skills with your partners’, you’ll be much better equipped to take on larger projects and not miss growth opportunities. 

Potential disadvantages of forming a business partnership

While setting up a business partnership offers many benefits, there are also potential disadvantages. Before you decide that a partnership structure is right for you, it’s essential to be aware of some potential drawbacks. Here are some of the most significant ones to consider: 

Potential for conflict and disagreements

When more than one person is involved in running a business, there’s always room for potential disagreements or conflict. When you start your new business, you and the other partners may be on the same page about everything, but as time goes on, disputes can arise. These disagreements could be about a range of issues, including: 

• How the business is run
• How to allocate or reinvest profits
• How to deal with challenges.

While disagreements are perfectly natural and can lead to compromises, they can cause a breakdown of the partnership. 

Difficulty in dissolving the partnership

Speaking of the breakdown of the partnership, ending a business partnership can be a complex process. If you’re just starting to think about forming a business, it’s unlikely that you’ve considered ending it, but it’s an important consideration. If you decide to dissolve the partnership in the future, you’ll need to agree on how to divide the business’s assets, including:

• Intellectual property
• Clients
• Revenue.
  

Alongside assets, you’ll also need to settle any outstanding debts or obligations to creditors and HMRC before you can dissolve the partnership. 

Loss of control:

If you’re the director of a limited company or a sole trader, you have almost total control over how your business runs. When you’re a partner in a business, that’s not the case, and you’re not the sole decision-maker. Any business decisions you make will need to be in agreement with the other partners. 

While in most cases, you’ll be able to find an agreeable compromise if you disagree, finding the middle ground can sometimes be tricky. In some cases, this can lead to tension, power struggles and the risk of losing control of the business’s direction. 

Imbalance of power

Another significant problem with a business partnership is the potential for an imbalance of power. This is often the case when one partner has more money, resources or expertise than others. 

This imbalance can affect the decision-making process and lead to disputes about the direction of the business. It can also lead to one partner feeling undervalued and the other feeling overworked, which can put the partnership at risk. 

The good news is that many potential partnership problems can be easily overcome with proper planning. When you form a partnership, you should discuss how you will communicate and solve problems together. 

One of the best ways to avoid problems down the line is to create a partnership agreement from the outset that outlines how you will work and run your business together.

How to start a business partnership in 5 steps

Now that you’re up to speed with the different types of business partnerships and their advantages and disadvantages, you can decide if it’s the right business structure for you. 

If it is, you can start to set up your partnership. 

Starting a business partnership in the UK is relatively easy. But there are some essential steps you’ll need to take to set your business up for success and ensure you’re legally compliant. Here’s how you do it: 

Step 1: Choose your business partners

Unsurprisingly, the first step in starting a business partnership is to choose your partner(s). If you’re already considering a partnership, you’ve probably already got people in mind, but if not, there are some things to look out for in partners. 

Try to find people who share your vision, work ethic and goals but are also people you enjoy spending time and working with. You’ll also need to find partners willing to share the business’s responsibilities, risks and profits. 

If you can, find partners whose skills complement your own. By choosing partners with different skills and experience, you can ensure you’re covering more key business areas. 

Step 2: Pick a partnership structure

Once you’ve picked your partners, you’ll need to choose which kind of business partnership you want to form. As we’ve already covered, there are three options: 

1. General partnership
2. Limited partnership
3. Limited liability partnership. 

Take your time selecting your structure, as it will impact how you register your business, pay taxes and run it. 

Step 3: Decide on a business name

Once you’ve chosen your partners and structure, you’ll need to pick a business name. When choosing a name, you must keep both Companies House’s naming restrictions and your target audience in mind. 

In terms of Companies House restrictions, your name needs to be: 

• Unique
• Not similar to an existing company’s name
• Inoffensive.

You can check whether a business name is already registered with Companies House using our company name checker. 

Coming up with a name that suits your target audience is a little trickier, but it’s well worth taking the time to pick the perfect business name. Try to pick a name that’s: 

• Short
• Memorable
• Easy to spell. 

Read our guide on how to pick the perfect business name. 

Step 4: Create a partnership agreement

Before you start designing logos and your company website, you should take the time to create a partnership agreement with the other partners. A partnership agreement is a legal document that outlines the terms of your partnership. It covers a wide range of issues, including: 

• How you’ll run the business together
• How profits and losses will be divided
• What happens if a partner leaves the business.

While there’s no legal requirement for partnerships to have an agreement in place, we highly recommend creating one. By starting out with an agreement in place, you can avoid potential conflicts and disputes in the future. 

Step 5: Register your partnership

The final step before you can conquer the world with your new business is to register your partnership. How you register your partnership will depend on the partnership structure you have chosen. Here’s a quick overview of how to register each structure: 

• General partnership — You’ll need to register your general partnership with HMRC. You can do this online; you only need a business name and a nominated partner. Your nominated partner will be the person who is responsible for HMRC correspondence and compliance.
• Limited partnership — Registering a limited partnership is a little more complicated than a general partnership but still straightforward. You’ll need to register your business with Companies House and supply them with a business name, registered office address and a list of general and limited partners. You’ll also need to pay a small fee.
• Limited liability partnership — Again, registering a limited liability partnership is a little more complicated as Companies House requires more information. To register, you’ll need to supply your business name, registered office address, the details of two or more designated members and an LLP agreement. 

Many businesses register their partnership using a formations company like Mint Formations to ensure the correct registration. This way, they can be confident that HMRC or Companies House receive everything they need for a successful registration. 

Set ip a business today with Mint Formations

So there you have it, everything you need to know about business partnerships — from the very basics through to registering with HMRC and Companies House. By this point, you should be reasonably sure whether a partnership is the right structure for your business. 

If you’re ready to get your business partnership off the ground, Mint Formations are here to help. We can help you register your limited liability partnership today for as little as £34 +VAT. Our formations experts will handle everything for you and ensure you’re set up for success. 

If you’re unsure that a partnership is the right fit for your business, we’re here to help. We can help you to register a limited company or as a sole trader instead, or if you’d like to speak to an expert before deciding, you can contact the team today.  

Explore Mint Formations company formation options today and find the right one for your business. If you have any questions, get in touch with the Mint Formations team today to discuss your options and find the best solution for your business. 

The post A complete guide to forming a business partnership appeared first on Mint Formations Blog.

What exactly are shares and stocks?

Simply put, “shares” are the more specific portion that makeup “stocks”. They are inextricably linked in that shares can be parts of the stock, but a stock cannot make up parts of a share. Think about it like a puzzle; the shares represent each individual piece of the puzzle, while stocks are the entire picture you see of the corporation once each piece, or ownership certificate, is put together. 

When a company begins, or if at some point along the journey the owner wants to raise capital, it will issue stocks. Investors may choose to buy a company’s shares or stock, and rather than lending the company money, they are instead buying a percentage of the ownership of that company. Depending on the type of stock they purchase, they may have some say in how the company operates.

Stocks — the broader term

When a publicly-traded company issues stocks, it attracts investors by issuing certificates of ownership for that company. This allows stockholders to claim dividends, or payouts, that are representative of the company’s annual or quarterly earnings. An investor can own stocks for many different companies or multiple stocks from the same company, and there are different types of stocks with different advantages and disadvantages.

The first category and most popular type of stock is called “Common Stock”. When investors purchase common stock, they own a part of the corporation and have an active role in decision-making processes. They use each unit of their common stocks as one vote to elect a board of directors that help shape the company’s future. Common shareholders also receive a share of whatever remains in liquidation after creditors and preferred stockholders are paid in full.

“Preferred stock” refers to a type of stock that receives a higher payout than common stock and preference over liquidation assets. Preferred stockholders always get priority on assets before common stockholders if a company goes bankrupt. The dividends are typically higher than common stock and are paid out monthly or quarterly. However, preferred stockholders’ voting and governance rights within the company are either limited or non-existent. 

Shares — Getting more specific

Shares represent individual units of stock and can be measured in numerical value. For example, you would say, “Jane owns three shares of Apple”, or, “Jane owns stock in Apple, Google and Vodafone”. If you have three shares of Apple and decide to broaden your investments by purchasing shares of another company, the terminology changes to stocks because it involves the shares of more than one corporation. Shareholders can be removed from the company or willingly sell their shares. 

Why do I need to know the difference between shares vs stocks?

If you’re starting a business, it’s important to take note of the incredibly valuable source of capital acquisition that shares and stocks provide. Only public limited companies can issue shares and stocks, and many investors will be unwilling to invest their money into your business without the option to receive shares in return. 

Knowing the difference empowers you to make better business and investment decisions for you and your business. Registering your UK company as a public limited company allows you to issue shares and stocks and puts you at an advantage over your competitors. 

At Mint Formations, we’ve helped thousands of people start their businesses. We help at every stage by providing the support and information you need for success. 

Start your own business today with Mint Formations. Our company formations packages make registering a business easy. Got a question? Get in touch with us today. 

The post Shares vs Stocks: The difference explained appeared first on Mint Formations Blog.

It can seem daunting, but learning about tax doesn’t have to tax your brain. Here we will explore the different types of UK business taxes, including Corporation Tax, Value Added Tax (VAT) and National Insurance Contributions (NICs), so you can fly through your tax returns. 

Different types of UK business taxes

Corporation tax

Corporation Tax is a tax levied on the profits of limited companies and some organisations operating in the United Kingdom. It applies to resident and non-resident companies with a permanent establishment or business activities within the UK. The tax is calculated based on the company’s taxable profits, which are the profits earned from its trading activities, investments and any other sources of income.

Corporation tax (CT) is forecast to raise £74.4 billion in 2022/23. It is the fourth largest contributor to government tax revenues after income tax, National Insurance contributions (NICs) and VAT. Nearly all corporation tax receipts are accounted for by onshore CT, which is forecast to raise £68.1 billion in 2022/23.

Corporation Tax has several key features that small business owners should be aware of. 

In the Spring 2021 Budget, Chancellor Rishi Sunak significantly changed the corporate tax system. The main highlights include raising the tax rate from 19% to 25% for companies with profits over £250,000, starting from April 2023. 

A separate rate of 19% was introduced for companies with profits under £50,000, with a tapered rate for businesses earning between £50,000 and £250,000. The budget also introduced a “super-deduction” allowing companies to claim a 130% first-year capital allowance for new plant and machinery investments until March 2023. This initiative aims to encourage business investment and stimulate economic growth. 

Additionally, a two-year extension was granted for “loss carry-back,” enabling companies to offset losses against previous years’ profits. The reforms were initially projected to raise £11.9 billion in 2023/24, increasing to £17.2 billion by 2025/26. However, in September 2022, the plan to increase the tax rate was cancelled but later reinstated by Chancellor Jeremy Hunt in October 2022 for implementation from 6 April 2023.

Value added tax (VAT)

Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production and distribution. It is charged as a percentage of the final selling price and is collected by VAT-registered businesses on behalf of the government. Small companies must determine whether they need to register for VAT based on their taxable turnover.

For most small businesses, the standard VAT rate of 20% applies to their products. However, two other types of VAT may apply:

• Reduced Rate VAT: This is a 5% VAT rate that applies to luxury necessities such as car seats for children, energy-saving activities, certain fees for charities and mobility aids for older adults.
• Zero Rate VAT: This is a 0% VAT rate where no VAT is charged on sales. Zero-rated products and services are considered essentials and include various types of food, children’s clothing, bookings, medical supplies and equipment.

It is important to record both these rates, including zero-rated products, on your VAT return. However, goods and services exempt from VAT, such as medical services, finance and credit and charity fundraisers, do not need to be recorded for VAT purposes.

You can refer to the government website for a comprehensive list of items categorised under reduced rate, zero rate and VAT exemption.

VAT registration thresholds determine when a business is required to register for VAT. As of the current threshold, you must register for VAT if your taxable turnover exceeds £90,000 in any 12-month period. However, it’s important to note that these thresholds are subject to change, so it’s crucial to check for any updates from HM Revenue and Customs (HMRC).

VAT operates through a system of input and output tax. Input VAT is the VAT paid on purchases and expenses related to your business activities, while output VAT is the VAT charged on your sales. The difference between the two (output VAT minus input VAT) is either payable to or reclaimable from HMRC, depending on the situation. Understanding how to calculate and account for input and output VAT is vital for managing your VAT obligations effectively.

Although taxation is mandatory for all UK businesses, not all companies must register for VAT if they do not meet the threshold. The Office for National Statistics (ONS) reports that only 45% of businesses are registered for VAT or Pay As You Earn (PAYE). However, some companies voluntarily register for VAT to take advantage of the benefits associated with being a VAT-registered business.

Related Reading: The Advantages and Disadvantages of Voluntary VAT Registration

National insurance contributions (NICs)

National Insurance Contributions (NICs) are payments made by employees, employers and self-employed individuals to fund various state benefits and services. NICs are relevant to small business owners who are self-employed or have employees. They help fund essential benefits like the state pension, statutory sick pay and maternity pay.

NICs are divided into different classes, each with its own rules and rates. Employees and employers pay Class 1 NICs, while Class 2 and Class 4 NICs apply to self-employed individuals.

Class 1 NICs are calculated based on the employee’s earnings, and the employer and employee contribute to these contributions. Class 2 NICs are flat-rate contributions paid by self-employed individuals who earn above a certain threshold. Self-employed individuals pay Class 4 NICs on their profits above a specific threshold.

NIC class (Tax year 2023/2024)

NICs are subject to changes and updates by the government. It’s essential to stay informed about any recent updates or changes to ensure compliance with your NICs obligations. Changes could include adjustments to rates, thresholds or additional allowances that may impact small business owners.

Understanding the different types of UK business taxes is essential for small business owners to manage their tax obligations effectively. By having a solid grasp of Corporation Tax, VAT and NICs, you can ensure compliance, make informed financial decisions and maximise available tax reliefs and allowances.

Tax obligations and deadlines

Record-keeping and bookkeeping requirements

Accurate record-keeping is crucial for small business owners to fulfil UK business tax obligations. It helps you maintain a clear financial overview, ensures compliance with tax regulations and simplifies the process of filing tax returns. Good record-keeping also enables you to track deductible expenses, claim applicable tax reliefs and provide evidence in case of an audit.

To meet your tax obligations, you need to keep and organise various financial documents. These may include invoices, receipts, bank statements, payroll records, expense reports and other documents related to your business’s income and expenses. Retaining these records for the required period, usually at least six years, is crucial.

Self-Assessment tax returns

Self-Assessment Tax Returns are how individuals report their income and calculate the tax they owe. As a small business owner, you may need to file a Self-Assessment Tax Return to report your business income, alongside any other personal income you may have. This includes self-employment income, dividends, interest, rental income and capital gains.

Staying aware of important dates and deadlines is crucial to avoid penalties and interest charges. The tax year in the UK runs from April 6th to April 5th of the following year. Here are some key dates to keep in mind:

• April 6th: Start of the tax year
• October 5th: Deadline for registering for Self-Assessment (if you’re newly self-employed)
• January 31st: Deadline for filing online Self-Assessment Tax Returns and paying any tax owed for the previous tax year.

It’s essential to be proactive and prepare your tax return well before the deadline to allow enough time for accurate completion and any necessary adjustments.

When completing your Self-Assessment Tax Return, avoid common mistakes that can lead to errors or penalties. Some common mistakes to watch out for include:

• Mathematical errors in calculations
• Forgetting to include all sources of income
• Failing to claim eligible expenses and tax reliefs
• Misreporting income or expenses
• Not keeping accurate records to support your tax return
• Taking the time to double-check your tax return and seek professional advice if needed can help you avoid costly mistakes and ensure accurate reporting.

Related Reading: When Is the UK Tax Self-assessment Deadline?

Tax deductions and allowances for small businesses

Allowable expenses

Allowable expenses are legitimate business costs that can be deducted from the business’s income to reduce taxable profit. These expenses must be incurred wholly and exclusively for business purposes. Common examples of allowable expenses for small businesses include rent, utilities, office supplies, marketing expenses, professional fees and employee salaries.

Specific examples of allowable expenses can vary depending on the nature of your business. For instance, if you run a retail business, allowable expenses may include inventory costs, packaging materials and shop maintenance. If you’re a freelance writer, allowable expenses might include computer equipment, software subscriptions and professional development courses. Keeping accurate records and retaining supporting documentation for all permissible expenses is essential.

Capital allowances

Capital allowances are deductions that businesses can claim on certain types of capital expenditure, such as purchasing assets used in the business, like machinery, vehicles or computer equipment. Instead of deducting the total cost of the asset in one go, you can claim capital allowances over a period of time. This helps to reduce your taxable profit and provides tax relief for investments in business assets.

Not all business assets qualify for capital allowances. Eligibility depends on the type of asset and the specific capital allowance scheme. Some common assets that may be eligible for capital allowances include machinery, equipment, vehicles, fixtures and fittings and certain types of renovation or improvement costs for commercial properties.

Research and development (R&D) tax relief

The Research and Development (R&D) tax relief scheme is designed to incentivise innovation and technological advancement. It offers tax relief to companies that undertake qualifying R&D activities. This scheme applies to small businesses engaged in innovative projects that seek to advance science or technology, including new product development, process improvement or finding solutions to technical challenges.

To qualify for R&D tax relief, your business must meet specific criteria set by HMRC. The requirements include undertaking activities that aim to achieve scientific or technological advancements, facing technical uncertainties and employing a systematic approach to resolve those uncertainties. Small businesses can claim either the SME R&D relief, which provides enhanced deductions for R&D expenditure, or the Research and Development Expenditure Credit (RDEC) scheme, depending on their size and circumstances.

Claiming R&D tax relief can provide significant benefits for small businesses. It helps reduce innovation costs, encourages research and development investment and can provide a valuable cash flow boost. Depending on the scheme and the specific circumstances, you may be able to claim enhanced deductions or receive a tax credit.

Seeking professional advice about UK business tax

At Mint Formations, we specialise in helping small business owners navigate the complexities of UK business tax. Our dedicated services are designed to provide comprehensive support and guidance throughout the tax journey. 

We offer a comprehensive and hassle-free all-inclusive core accountancy service specifically tailored for limited companies in the UK. We believe a core accountancy service goes beyond mere paperwork and filing obligations. When you choose our service, you gain access to ongoing support and the opportunity to seek professional tax advice whenever you need it.

As part of our service, we will assign a dedicated senior accountant as your main point of contact. This expert will always be available to answer your questions and address any concerns.

Our core accountancy service includes the standard filing of all company accounts and tax returns. However, we go above and beyond by providing additional services at no extra cost, ensuring you receive excellent value for your money. We are committed to supporting you comprehensively throughout your business journey.

Included in our core accountancy service package:

• Company year-end accounts (including Companies House filing)
• Company corporation tax return (to HMRC)
• Dealing with HMRC and becoming your authorised agent
• Company annual confirmation statement filing (with Companies House)
• Company secretarial services — e.g. filing changes to company officers, address or structure
• Registering director(s) and shareholder(s) with HMRC for self-assessment
• Filing self-assessment tax returns with HMRC for director(s) and shareholder(s)
• VAT registration
• Ad-hoc ongoing advice
• Legal tax planning discussions
• Management accounts
• Payroll (including annual payroll for directors)

Optional extras:

• Filing quarterly VAT returns
• Bookkeeping and management accounts preparation

Explore our legal and business packages today, and let us help you with your UK business tax and accounting. If you have any questions, feel free to contact us. We’re always happy to help.

The post Navigating UK business tax: What you need to know as a small business owner appeared first on Mint Formations Blog.

In 2019 the UK spent almost £7 million on pets . With half of the population owning either a cat or a dog — or both — it is a great time to start a pet treat business.

Keep it simple

As with any business, when you first start a pet treat business it is a good idea to keep things simple. Focus on one or two signature products and concentrate on getting those perfect. You can always branch out when you find your feet.

A good place to start is with the two most popular types of dog treats — the biscuit treat and the chew. According to the PDSA Animal Wellbeing Report, 77% of dog owners feed their dogs biscuit treats and 63% feed them dental chew treats. But don’t forget cats, 54% of cats are fed commercial cat treats so it’s worth taking a look at how you can incorporate these into your business plan.

Position your pet treats

Consider whether there’s a gap in the market and where you see your pet treats sitting within it. Do you want to be a gourmet pet treat brand or focus on the health food market? Both are viable options, pet owners love to indulge their pets but they are also increasingly aware of the health and dietary requirements of their animals. Take a look at some popular brands in different markets and consider your options carefully.

Rules and regulations

Similarly to human food manufacturing, animal feed production is subject to many rules and regulations. Before you start a pet treat business, you must contact your local Trading Standards for advice, since you must be approved by your local authority before you begin operating. You can find application forms on your local authority’s animal health website.

You must also consider whether you will be using Products of Animal Origin (POAO). POAO products contain meat, fish, eggs, honey and dairy. If you aren’t going to use products of animal origin in your pet treats, you can start production as soon as you are registered, and before a visit from a Trading Standards Officer. However, if you are using products of animal origin in your pet food, production must not start until you have received your approval from the APHA (Animal and Plant Health Agency).

You can also find all of the key legislation and regulations on the Food Standards Agency website.

Consider your branding

When you’ve done your research and chosen your niche, think about how you’ll fit into that niche but also stand out from the crowd. For example, if you’ve chosen to create a delicious gourmet pet treat brand, make sure you narrow your research down to find out what is expected of a gourmet pet treat. Take a look at their branding and how you can make yours stand out while retaining the quality and high-end look.

When you consider the naming of your pet treat business, look at your audience and think about how they will view your products. Whether you want to appear slick and professional or familiar and homely. Many start-ups have used the name of their pets or a fun animal pun while others have utilised words like “advanced” and “nutrition” in their brand name. Whatever you choose, be sure that it reflects your products.

Your packaging can turn into one of the biggest expenses when you start a pet treat business. However, alongside the ingredients, it is one of the most important aspects to consider. Your audience needs to feel confident in your product. Research your options, including recyclable and biodegradable packaging. The good news is that there are lots of packaging manufacturers out there and prices are increasingly competitive.

There are some requirements when it comes to labelling your product so make sure you include all of the necessary information. You can find all you need to know about labelling on the Pet Food Manufacturing Association (PFMA) website.

Market your pet treat business

Once your pet treat business is registered and approved, it’s time to start getting your name out there. There are many ways to do this. You can begin with your website and social media. If you can, include this in your budget and have a professional company website created that details all of the information your customers need to know about your business.

The taste test is important too when it comes to pet treats — animals won’t mind what the packaging, branding or website look like! Talk to local businesses such as pet shops, grooming salons and vet surgeries and ask whether they can pop your treats alongside some business cards by their till or on reception for customers’ pets to try.

Social media is an effective way to market a business but when it comes to anything pet-related, it becomes even more effective. People love seeing images of animals looking cute — Cats of Instagram has around 10 million followers. Sharing great content is an easy way to escalate your following and build a relationship with your audience. The bigger your audience, the more potential customers you will reach with your posts.

Your posts should be broken into different types of content — the cute pet content and the promotional content. A great use of social media is the “giveaway”. Encourage people to like and share your posts or follow your account and they could be in with a chance of winning a hamper of goodies. This will boost your following and get you new customers.

Are you ready to start a pet treat business? Mint Formations can help you form your limited company or self-employed business and remove the stress that can often come with starting a business. We’ll secure your brand name and get your company registered fast so that you can start doing what you love!

The post Should I start a pet treat business? appeared first on Mint Formations Blog.