People starting businesses 'need to think about tax from the beginning'

Date: 31st July 2008

People planning on starting their own businesses need to be aware that some of the decisions they make right from the start will have important implications for the tax they will later have to pay.

Website allmediascotland.com said that many people did not realise some of their tax liability was determined by the way they set up their own company.

It explained that the "tax implications" are different for sole traders, partnerships and limited companies, making the services of an accountant important from the start.

"Once you have decided on your legal status, you will need to register your venture with HMRC. If you intend to employ staff, you will also [be] required to register for a PAYE/NI reference to allow you to deal with the tax on your employees' salaries," the site added.

What's more, the website said that some people might also have to "apply for a VAT registration number".

"It is important to keep accurate and detailed records of your business transactions. You may decide to employ the services of a bookkeeper," it concluded.

Recently, business reporter Karen Dent explained in the Journal that many small businesses did not full understand the tax exemptions and reliefs they were entitled to, suggesting many could benefit from consulting with an accountant.