Since running my own businesses, I have definitely worked harder than I ever have done before, and learnt more than I ever have in the past. Learning theories in A Level and at Undergraduate level is great, as was having work experience in large multinational companies. But I found that my passion for small enterprise, which subsequently led to entrepreneurship, has provided me with the most learning opportunities. Indeed, I very rarely go a week without learning something new in the field of business.
My most recent discovery was how to file Corporation Tax. I received a letter to the registered address of Access Regional. I followed the instructions and logged onto the website. I then had to wait a week whilst paperwork containing my newly created online filing account came through, which included my activation code (so ensure that you leave yourself time before the deadline, so you don’t risk being fined!).
Corporation Tax is the company equivalent to Income Tax. Considering that although Access Regional had been registered since December 2011, it had remained largely dormant for a year whilst we sorted out our strategy and had shareholder and directional issues. However, at the time, we had not foreseen this big delay, so had not registered the company as dormant, meaning that we were now at a point where our first year’s Corporation Tax was due. Your company needs to pay Corporation Tax on taxable profits for each Corporation Tax accounting period. Your accounting period is normally 12 months and tends to match your company’s financial year.
The amount of Corporation Tax you pay depends upon the profits your business makes, and the rate depends on how much profit your company generates. If you’re a newly formed company, the rate which most likely will apply is the small profits rate of 20%. This applies to companies with profits of £300,000 or less. If your profits are over £1.5m, this is the main rate, and stands at 24% – although this is set to change to 23% in 2013. If your profits fall between these, you’ll have to pay the main rate, however you can apply for marginal relief, which means that your bill is reduced by an amount depends on your profit figure.
You can forgo this whole ‘exciting’ filing process if you have an accountant; however, chances are if you’re small, you won’t be able to afford one. And besides, I always feel that it’s best to do these things at least once so that you know the process in case it is useful in the future. The HMRC offer a number of useful tools for helping with this. They have an online demonstration of what will be required but the most useful resource which I have since discovered is a free online webinar for small businesses.
You’ll be asked to provide financial statements such as profit and loss, and a balance sheet covering the accounting period, so worth brushing up on those and taking your time (I was very grateful for my Management Accounting modules at this point!). But the good thing is that you can submit these to Companies House at the same time, so that you’re essentially killing two birds with one stone, as your financial statements need to be submitted to Companies House at the end of your company’s accounting period too.
It took me a morning to do, but once it’s done, it’s done. And it was a very useful thing to learn. There are a lot of resources around to help you, so you need not feel overwhelmed.
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