Starting A Business FAQ

If you're self-employed or a sole trader, legally you must keep records of your income (and any capital gains) for at least five years and ten months after the end of the tax year.

Learn how to understand your accounts here.

All chartered accountants are members of the Institute of Chartered Accountants, who will assess your complaint to decide whether conciliation is appropriate or alternatively, carry out an investigation.

Other accountants may be members of the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants, or the Chartered Institute of Public Finance Accountants. Book-keepers may belong to the Institute of Chartered Secretaries. All of these bodies will investigate and may take disciplinary action against the accountant if your complaint is upheld.

Need to find an accountant? Get a free initial meeting with TaxAssist Accountants.

There are various methods of funding a legal case used by solicitors:

• Charging by the hour: This is the most common method of charging. Hourly rates vary from high street firms where you can expect to pay somewhere between £80 to £120 an hour for advice on private and commercial work, all the way through to £350 an hour for a senior partner in a City firm for extremely expert advice on complex points of commercial law.
  
  
• Fixed fees: This form of payment has the obvious appeal of limiting your liability for legal costs and, after the hourly rate, it's the next most common way of charging. The obvious downside is that if your case concludes quickly, then you will end up paying more than you may have on the hourly rate basis.
  
  
• No win, no fee: 'No win, no fee' is a deceptively simple expression. On one level - and as the name implies - solicitors are paid nothing for their work if they lose, but it also covers agreements whereby solicitors can charge more if they are successful.
  
  
• Legal Aid/the Community Legal Service: To be eligible for Legal Aid, you have to show that you cannot pay for your case (i.e. that you are financially eligible) and that you have a sufficiently strong case that you are likely to win. Even if you're working, own your home and have savings, you may still qualify. However, you may well have to pay a contribution towards the cost of taking your case to court.

Yes, from October 2004 they have applied to all employers.

Find out more about employment law.

Corporation Tax is accounted for in 12-month periods, unless the accounting period from its commencement to the first accounting date, or the last period of operation, is less than 12 months. (You may already be thinking that it's time to consult a professional accountant and, in our view, if you have a limited company and you are dealing with Corporation Tax you should certainly seek professional advice.)

Every company has to fill in an annual Corporation Tax Return (Form CT600) and this Return has to be submitted by the company secretary or the directors within 12 months of the end of the accounting period. However, tax has to be paid, assuming we are dealing with a small company, nine months after the end of the accounting period. Big companies have to pay Corporation Tax at more frequent intervals.

Find out more about tax and your business.

Corporation Tax is the tax that limited companies and unincorporated associations (such as clubs) pay on their profits. It's a tax on the profits of the company; profits include interest and capital gains.

Find out more about tax and your business.

In principle, you are liable to Capital Gains Tax in respect of any assets used in your business. However, if further business assets are purchased within one year before or three years after the sale, you can claim 'rollover relief' as a result of which the gain on the disposal is deducted from the cost of the new business assets acquired. Therefore, no tax is paid until the new business assets are sold, unless they too are replaced. For these assets to qualify they must either be land and buildings, fixed plant and machinery, milk and potato quota or other agricultural quotas. Please note that motor vehicles or any vehicle on wheels don't qualify.

Find out more about tax and your business.

This is a tricky one - it all depends.

As a general rule, it's inadvisable to incorporate if your profits are under £50,000 for sole traders and £100,000 for two people in partnership, but with the rates of corporation tax as they currently are, many businesses are incorporating with profits lower than these.

Find out more about Limited Company Formation.

It's always best to have a business partnership deed so that if anything should happen to one of the business partners, or you should fall out, there is a legal agreement entered into at the start which establishes how the business partnership should be dissolved and how the assets and liabilities allocated.

Lawpack has it's own Business Partnership Agreement Form Pack or its Scottish version - both can be purchased for only £4.49.

In principle, you can either pay yourself from your own company by a salary (which could be in the form of a bonus or other remuneration) or, so long as you hold shares in the company, you could pay yourself from your own company by a dividend.

If you are paid a salary from your own company, normal PAYE rules apply.

If you are paid a dividend, your company doesn't have to pay any tax over at the time of making the distribution. This is because dividends can only be paid out of profits which have already been taxed. In principle, dividends are now a more tax-efficient way of withdrawing profits from a company than salary.

If you have lent money to your company and that company wishes you to be able to withdraw some of that loan (to have it paid back), there would be no tax involved with any such repayment.

Find out more about the law and your business.

All you need do is prepare a notice and display it where any customers, visitors, etc. can see it.

Find legal forms, advice and information on Starting a Business.

As a sole trader you are personally liable for any debts or losses incurred by the business.

Find legal forms, advice and information on Starting a Business.

No, but you should still have a business plan stating what you are planning to do and what you want to achieve. 

Prepare a table or spreadsheet including your planned figures, for example, the prospective number of customers, the average value of each sale, your sales income, materials bought, overheads, profit, etc.

Or use Lawpack's ready-made business plan template to speed things up!

Find legal forms, advice and information on Starting a Business.

A firm or business partnership, unlike a company, is not a legal entity separate from its members. An individual business partner will therefore be personally liable:

1. for his own wrongful acts; and
2. for the wrongful acts of his co-partners committed in the normal course of the firm's business; and
3. for the wrongful acts of the employees of the partnership committed while acting in the course of their employment.

Where the partners are defendants under (1) or (2) above they are sued in the name of the firm (i.e. the claimants are expressed to be ''Thompson, Thompson and Smythe', a firm'). Only those business partners who were business partners at the time of the act complained of will be held liable.

Business Law? Find out more...

For most new businesses, you must start adding VAT onto your business invoices when your turnover exceeds £67,000 a year (2008/09 figure).

Find legal forms, advice and information on Starting a Business.