Sole trader

You must register with HM Revenue & Customs (HMRC) as soon as you can after starting your business, or you may face penalties.

Tax responsibilities

You must:

  • send a Self Assessment tax return every year
  • pay Income Tax on the profits your business makes
  • pay National Insurance

You must also register for VAT if you expect your business’ takings to be more than £79,000 a year.

Limited Company

You must set up the company with Companies House and let HM Revenue & Customs (HMRC) know when the company starts business activities.

Every financial year, the company must:

  • put together statutory accounts
  • send Companies House an annual return
  • send HMRC a Company Tax Return

The company must register for VAT if you expect its takings to be more than £79,000 a year.

If you’re a director of a limited company, you must:

  • fill in a Self Assessment tax return every year
  • pay tax and National Insurance through the PAYE system if the company pays you a salary

Further reading:

Key tax deadlines for small businesses helpsheet download

Starting Your Own Business e-learning from HMRC



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