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Giving your business the best start with tax

A straight-forward short guide in association with HM Revenue & Customs (HMRC) providing tax information on working for yourself.

You’ve decided to work for yourself. But what next?

When you start working for yourself, you need to tell HM Revenue & Customs (HMRC). If you are late telling us about your self-employment, you may attract a penalty. Not paying your National Insurance contributions puts your right to benefi ts at risk. HMRC can help you understand what you need to know about tax and help you to get it right.

To register a new business go to or call the Helpline for the Newly Self Employed on 08459 15 45 15 and give them details about you and your business.

There are a number of short online videos to help you understand the different areas to starting a business. Visit you can also follow three new businesses as they tell us in their own words what it’s like to go it alone.

These short online videos cover:

● Setting up in business
● Record keeping
● Income Tax for the self-employed
● National Insurance for the self-employed
● Corporation Tax
● Construction Industry Scheme
● Importing and Exporting
● Employing other people (PAYE)
● Business Allowances

The different types of tax you must pay depends on what you do. You can download a free guide by HMRC on 'Tax: the basics' which will give you more information on the different taxes.

Records you need to keep:

It is vital to keep full and accurate records of your income and expenses from the start. Keeping records makes sound business sense and is a legal requirement. So it is important to get a proper system in place from the outset, and update the information regularly.

Keeping good records makes completing your tax return(s) easier and quicker; makes it easier to pay the right tax at the right time; and helps you avoid paying unnecessary interest and penalties.

You should keep invoices and receipts to show what you have bought or sold relating to your business.

If you are employing others, you must keep records of their wages and tax/National Insurance you have deducted/
paid to HMRC.

Keeping bank statements and building society books is vital, especially if you don’t have a separate business account. You should be able to show clearly what you have spent personally and what is spent on business. If you use cash, you will need till receipts and a record book to keep track of it all.

If you are using part of your home for business then you should keep copies of the utility bills so that you can work
out the amount spent in relation to your business.

If you have an accountant you might want to get his or her advice on what system suits your business and on how
to keep your records up-to-date.

Keeping records is important as penalties were introduced in April 2009 for not taking reasonable care with records and tax returns. For more information about taking reasonable care and the new penalties, visit

For help with record keeping go to

To watch a short online video on ‘Record Keeping’ visit

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