FAQ - Nokes & Co

FAQ

How do I set myself up as self-employed?
To become self- employed you must first register with HM Revenue & Customs. After registration, HMRC will send you a Unique Taxpayer Reference (UTR) and set up the right tax and National Insurance contributions. Your UTR will be used to complete a self-assessment tax return at the end of the accounting year.
What are the advantages of being a sole trader?
Setting up as a sole trader rather than a limited company can offer a number of attractive benefits. As a sole trader you will own all of the business assets and any profit that it makes. You have full control to run the business without interference and your business affairs can remain private as there is no obligation to register with Companies House. As sole traders are normally small businesses they tend to be better equipped to offer a personalised service to customers and can act quickly to meet their needs. There are however some disadvantages to setting up as a sole trader – as the business is not considered a separate legal entity, as the business owner you are liable for any debt which can put personal assets such as your home and personal savings at risk. It can also be more difficult as a sole trader to raise finance for your business which may impede plans for future expansion.
When do I have to register for VAT?
You can only register for VAT if you are a business making taxable supplies. A business is defined as a continuing activity involving getting paid for providing goods or services- in money or another form of payment such as in-kind or barter. Taxable supplies are anything you do by way of your business not just those things done in the ordinary course of its day-to day running. Some business supplies including money loans and property transactions are considered exempt supplies. Registration for VAT is compulsory if in the last 12 months, your turnover of taxable goods and services supplied within the UK goes above the current threshold of £81,000 or if you expect it to go above that figure in the next 30 days alone. However, if your turnover has only exceeded the threshold temporarily, you may apply for exemption from registration.
Can I register for VAT if my earnings are below the current threshold for registration?
Yes, there may be cash flow advantages to registering for VAT before you hit the registration threshold. Voluntary VAT registration may benefit you if you sell zero-rate items and buy standard rated items as you will receive a VAT refund from HMRC or alternatively if you don’t sell anything during a VAT accounting period, you may still be able to claim VAT back on your purchases. Additionally, you can apply to backdate your VAT registration by up to four years however, you must be able to provide the right evidence and meet other conditions for reclaiming VAT.
What is CIS? Who are CIS contractors and subcontractors?
CIS stands for Construction Industry Scheme. It sets out the special tax rules and methods for handling payments that apply to contractors and subcontractors working within the construction industry. CIS may also apply to local authorities, government departments and management organisations that spend £1m or more a year on construction. HMRC will deem you to be a CIS contractor if you engage subcontractors for construction operations; your business spends an average of £1 million or more a year over a three year period on construction operations or if you are contracted to work in domestic households and engage subcontractors to complete the work. You are deemed to be a CIS subcontractor if the contractor that hires you decides you are self-employed for the purposed of the contract. Registration as a subcontractor under the CIS Scheme will result in HMRC setting you up to receive payments under deduction. Contractors will deduct tax at 20 per cent from your invoice and pay HMRC.
What is a company tax return?
A Company Tax Return is a document which is filed for each accounting period by companies and organisations liable for Corporation Tax. You must file a return every year even if your company or organisation hasn’t made any taxable profits.
What do I need to include in my business plan?

Having a solid business plan will help you to set a clear direction for your business both now and in the future and will also reduce the risk of overlooking vital considerations prior to setting up your business. A business plan is also essential if you are looking for credit, business loans or overdrafts from banks or other lenders. It is important that your business plan sets out all the main points and provides a clear snapshot of your business idea. A detailed business plan will usually include the following:

Executive Summary
A brief description of where your company is, where you want to take it, and why your business idea will be successful

Business Overview
Why you intend to start your business and the purpose of your products or services, your current position, strengths and weakness of your competitors, target audience, competitive advantages and a brief outline of how you intend to grow the business.

Business Strategy
How you propose to meet specific business objectives and goals over a 1/3/5 year period, what strategies you will take and what resources you will need. The business strategy should also include potential threats and opportunities in the short to medium term.

Marketing
Details of the market research you have conducted within your chosen industry and subsequent marketing plans including how you intend to reach your target audience, what technology you will use to promote your business to clients, how you will build trust and credibility and your marketing budget.

Team and Management
Details of the structure and experience of your team and any external advisors

Financial Budgets and Forecasts
Cash flow forecast, profit & loss forecast, balance sheet forecast, capital expenditure budget