In this short article we highlight three tax tips you should consider when setting up and running your business. Tax Tip 1 – Choose the Right Business Structure Often a business is set up with little thought being given as to which form of vehicle should be used in order to carry on your business. Usually, an individual will set up as a sole trader and, where two or more individuals are setting up the business, this will be carried on through a partnership. However, a private limited company may be the better vehicle and in some industries, particularly IT, TV and health care, it is standard practice for a company to be used by consultants, because otherwise, potential end clients and suppliers will refuse to deal with you. There are various tax implications to consider in carrying on your business through the different forms and, clearly, you should be operating with the most tax efficient vehicle, whilst at the same thinking about the costs, practical considerations and meeting your commercial objectives. Depending upon the amount of profits generated, how much will be reinvested into the business versus how much you want to extract from the business, it will generally be more tax efficient operating through a limited company compared with trading on your own account as a sole trader or via a partnership. However, a sole trader/partnership can be the better vehicle when starting out, because it’s likely that the biggest costs will be incurred at this stage and any trading losses may be offset against your other income of the same tax year meaning that you can redu [...]

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