Tax & admin · 11 December 2015

Working with HMRC as a small business

It's important to know where you stand with HMRC
It’s important to know where you stand with HMRC
Running a business brings with it a number of obligations and responsibilities not least with the tax authorities.

The first step is to register your business which should be done early in the process of setting up for new business owners, but many don’t realise it’s a necessity until they’re a few months in. KPMG’s Bivek Sharma says he often receives confused calls as to whether an owner needs to do anything months down the line. So what do you need to make sure you’ve done when it comes to registering a business and how early on does it need to happen?

Firstly, a new firm needs to register with HMRC within three months of trading and this can be done online. It’s not that difficult, but it can take a bit of time as the current system is fairly disjointed you need to register for the various taxes separately, so will find yourself re-inputting the same information a few times. Sharma pointed out the incoming digital tax system should help to save time for business owners in this respect however, as everything will be all in one place.

you’re either a sole trader, an incorporated company or a partner, and if you’re an incorporated company, youll have to register with Companies House too, Sharma explains. You have to register for the various taxes individually, so your VAT, your PAYE if you’re taking on staff, corporation tax and so on.

Many small firms choose to take on an accountant at this point, to help keep on top of the various deadlines your PAYE is real-time so monthly, VAT is quarterly and then your tax return is at the end of the year and you need to make sure you’re on top of all of these, Sharma explained.

Incorporated companies need to be registered on the Companies House website so you can register a firm if it’s a private company limited by shares, using model articles of association and the name doesn’t contain a word you need permission to use.

It doesn’t cost much to do, online applications cost 15, while postal ones cost 40. The full list of costs can be found here. You’ll need to have pulled together information beforehand including a company name, company address, director’s name, shareholder’s name and written rules about how the company is run. Once registered, you’ll receive a certificate of incorporation providing confirmation the company legally exists. You will also receive a Unique Taxpayer Reference (UTR), which HMRC sends to the company’s registered address once you’ve registered with Companies House.

This also means you need to register for corporation tax within three months of starting the firm.

The next few years of business will require constant attention to detail and an upkeep of accounts monitoring purchases and expenses and keeping everything up to date. It is, Sharma admitted, fairly time-consuming, which is why many do opt for an accountant here, if they haven’t done already.



Bivek Sharma has been a partner with KPMG for over ten years, specialising in accounting, tax and software. He started the Small Business Accounting division over two years ago with a goal to transform accounting services for small businesses. The team works with a huge variety of industry sectors and companies including coffee shops, technology companies, manufacturers, pubs, restaurants and retailers.

Business Law & Compliance