There has been an increase in people starting their own businesses in recent years and it’s easy to see why. Starting a small business gives you the freedom and flexibility to work for yourself, and it often allows you to turn a hobby or interest into a steady income. However, there will come a time when you need to take the step of registering a small business.
What Counts as a Small Business?
There is a lot of varying information out there about what counts as a small business, and people do tend to think differently. According to most definitions, a business with fewer than 50 employees and an annual turnover of less than £10 million is classed as being small. This does change slightly, but it’s the definition that the UK government uses to separate small businesses from micro businesses, medium businesses and large businesses.
How Do I Register a Small Business?
If you are making less than £1,000 each year, you don’t need to inform HMRC of your earnings, and so you don’t need to register as a small business. This is often the case when people first begin a side project, before things gain momentum and turnover increases. Once you start to earn £1,000 or more a year, you need to register your business with HMRC – this also becomes the time when you need to start completing self assessment tax returns – and there are a number of ways to do this.
Firstly, you need to find a unique name for your business, and then you need to decide what type of business you want to register as. You can choose to register as a sole trader, a partnership or LLC. There are key differences between each of these, and the right one for you will depend on your business type, and how you plan to run the business from an administrative point of view.
What are the Responsibilities of a Small Business?
Regardless of the industry that you work in or the products and services your small business provides, you will have some responsibilities. These will vary from business to business, and there aren’t as many if you are working as a freelancer or you don’t employ staff. If you take on agency workers or freelancers you have some additional responsibilities, such as managing their health and safety at work. Running payroll, paying their NI, organising pension contributions all need to be taken care of. You may also need insurance and licensing, depending on what your small business does.
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