Your Tax Responsibilities as a Small Business


Tax returns and payrolls can seem light a living nightmare for small businesses and without an accountant, you might find that you are not always aware of your responsibilities. This guide will help you to better understand the different taxes and payroll systems you must register for in order to fulfil your legal business obligations.

Your Tax Responsibilities as a Small Business

Corporation Tax

If you a registering as a limited company, you will also have to register for and pay corporation tax. Once you have incorporated your company, HMRC will be sent information by Companies House and you will then need to fill out some additional forms sent to you by HMRC.

If these forms are not sent out to you promptly, it’s important to obtain copies from the HMRC website. Not sharing this information with HMRC could slow down your new business and lead to fines.

When you are fully registered as a limited company, HMRC will send you a notice each year reminding you to pay your corporation tax. This tax return will need to be completed on time and sent off with your accounts.

It is very important to note that your corporation tax is actually paid before you fill out your return, so you will need to ensure you have money put aside for this. Corporation tax is normally taken 9 months after your accounting period has ended.



Another tax responsibility you have as a small business owner is VAT. Although you may not initially be legally required to register for VAT, once your sales reach £70,000 a year it is a legal obligation to register.

Even if your sales aren’t reaching this amount, you can actually register for VAT voluntarily. However, it is worth nothing that this comes with much more paperwork and can be tricky to tackle if your earnings are erratic.


Registering As An Employer

As a small business owner, you may also need to register as an employer if you are employing an individual at or above the PAYE limit or NI lower earnings limit. These limits are £97 per week or £421 per month, anything less and you might not have to register them.

Directors of limited companies are also treated as employees, so you might actually have to register yourself, even if you are the sole person working at the company. You can register an employee by ringing or emailing HMRC. The information you need to give will depend on the type of business you own, so you will want to make sure you have everything to hand.



Another one of your obligations as a small business owner and employer is to run a PAYE system, which allows tax to be taken straight from employees pay packages. As a company owner, you must tell HMRC who will be in charge of this system, even if it is you. Alongside this, you will also have to complete an Employer Annual Return form by May 19th each year.

Whilst this all sounds like a lot of work and perhaps a tad confusing, HMRC will send you info pack containing all of the information you need on how to set up a payroll and ensure the relevant taxes are deducted via PAYE.

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Accounting isn’t for everybody, so if you want simple, straightforward advice on taxes and PAYE systems, team up with Number Juice and get your tax worries sorted in a flash.