Last Updated on April 5, 2023
We have many people around us who have just started their startups. Apart from accounting and finance students, we have many students who had never dreamed of a taxation exam one night before their actual exam. We have many youngsters having a spark to start their own business. Starting your own business does not mean investments or professional dealings only.
Starting your own business will open a door for you in the taxation world, where you have to pay tax on everything you come across. No matter what your favorite subject was in high school or at the time of graduation, you still have to show a deep interest in understanding ways to tackle the ups and downs in the tax systems. Because there is a rule: the only thing that can save you from being drenched by the tax system is your tax knowledge!
Corporation tax is usually considered a tax that implies the profit gained by running a business. Whether the company is small or large, if it’s a family business or an unknown people stand to make it, HMRC would charge a nineteen percent tax on the additional amount if the total profit gained lies above the threshold amount. The threshold figure is not the same for every business. It’s different for small-scale companies and large-scale companies.
“Corporation tax is usually considered a tax that implies the profit gained by running a business.”
Let’s suppose you love to drink coffee and in the meanwhile you dreamed of opening a coffee factory that you will enjoy being a part of. It’s a small-scale business because you and your family members are employed. So we can say that it’s a family business. If the total income by running a factory comes out to be below £300k then your company is considered a small-scale business. The nineteen percent ratio of corporation tax is employed above the threshold earning.
While making a full-on plan for the next five years for your business, the number one thing that should be planned earlier is to avoid mistakes. The very first step to prevent your error is to consider it properly and recognize it. Any flourished business can’t wait till HMRC comes to his neck and demand the payment for his mistakes, so there is a lot more going on than to finish your orders on time.
“While making a full-on plan for the next five years for your business, the number one thing that should be planned earlier is to avoid mistakes.”
Prepare Infrastructure of Your Taxation
Remember, the whole reputation of your business lies in the attitude it’s going to deal with the problems. An entire infrastructure of the tax system should be adequately bottled up to avoid any misconception. You must be aware of where to invest when to invest and what to invest.
These W questions will help you in maintaining your professional worth. The number one reason that lies in a company’s bankruptcy is paying vast amounts of taxes when they are not in a position to pay it. So paying tax is a must thing. Of course, some banks can give you a loan at that time, but your attitude and professional dealings matter here!
“An entire infrastructure of the tax system should be adequately bottled up to avoid any misconception.”
Pay Your Corporation Tax on Time and Don’t Delay Them
Pay your corporation tax on time and don’t delay them. Passing the original submission date will not allow you to escape from the hand of HMRC, but it will compel you to pay more as part of the fine. So, mark your calendars for the current tax year, and don’t miss the opportunity of paying tax on time.
The increased amount due to fine will be another burden on your company, and don’t underestimate it. The bigger the business, the bigger the corporation tax figure and the more prominent will be fine.
After viewing the penalties concerning late submissions, you will never miss the actual date.
- A £100 is charged as a penalty if you are late by one day.
- Another £100 is charged if you are late by three months
- A ten percent penalty in addition to your unpaid corporation tax is charged if you are late by more than six months
- Another ten percent is charged over everything if you are late by one year in submitting the actual return.
- If you have missed your three chances consecutively to submit corporation tax on time, the £100 penalty will be replaced by a £500 fine.
Don’t Rely Wholly on The Tax Specialist
If you are the director of your company and have hired a tax specialist to prepare the corporate tax returns, don’t rely wholly on the tax specialist. Of course, you need to get help and aid from the tax specialist, which is why you have hired him. Still, the main point that needs to be mentioned over here is that you will be questioned in front of HMRC for any up and down happening inside your company and not the person who claims to have a certified degree in accounting and finance.
So, make sure to check the corporation tax returns and have a proper discussion with your accountant before any payment. Don’t forget to discuss any escape door that might help your company submit less amount as a tax.
“You will be questioned in front of HMRC for any up and down happening inside your company and not the person who claims to have a certified degree in accounting and finance.”
Submit your corporation tax return with accurate information. If it doesn’t happen, you might have to face problems. HMRC may charge a penalty over this misguidance as well. Who knows that you have made errors intentionally or unintentionally? What if you have missed a single zero while making an input regarding your profit? Who will accept that it was unintentional or by mistake? Cross-check and everything before handling your returns.
Submit Your Corporation Tax Return with Accurate Information
Different types of penalties are charges on different sorts of mistakes, and in the end, it is your company or self-established business that will be paying for the error. So why is so much hurry? Calm down. Take a deep breath. Focus on every small detail and then fill out the requirements. Just imagine it as your examination paper which you used to fill out with total concentration. If possible, sit in an environment where you don’t have to focus on while filling out the details.
“Different types of penalties are charges on different sorts of mistakes, and in the end, it is your company or self-established business that will be paying for the error.”
These were some of the common mistakes that should be avoided. Because in the end, you will be suffering. So make your business a tool and not a hammer that hurts your thumb while fixing a nail. Creating and running your own company should be a way to earn money and not lose it just because of slight ignorance.