Sole Trader Business Tax

The type of business tax you pay depends completely on the structure of your business.

The type of tax you pay as a business depends completely on the structure of your business. If you run your business as a sole trader then you will pay income tax, if you run your business through your own limited company then you will be liable for corporation tax. We have included details for both below so you can see the comparison between being a sole trader or using your own limited company.

Brief descriptions of each business tax

Sole Trader – Income Tax

If you run your business as a sole trader then you will need to prepare accounts each year for your business. These will show the amount of money coming in and the expenses going out with a final profit figure for the year. This figure is then turned into your taxable profit by adding back the expenses that are not tax deductible and taking off any capital allowances (tax reliefs due to buying large assets).

Now you have your taxable profit you will be liable for tax at the appropriate rates of personal tax, currently 20% for the Basic rate, 40% for the Higher rate and 45% for the Additional rate.

Addition to this you will need to pay Self-Employed National Insurance Contributions.

Limited Company – Corporation Tax

If you run your business through your own limited company then you will need to pay corporation tax on the taxable profits of the business. The current small business rate of corporation tax is 20%.

Which ever structure is best for you, The CMJ Accountancy service includes the working out of your businesses taxable profit and the preparation and submission of your tax return and all supporting computations.

For further help, or to enquire about joining our services, please call us on 0845 834 0264 or drop us an email at info@cmjaccountancy.co.uk.

Disclaimer

This information is for general information only. We take no responsibility for any action taken or refrained from in consequence of its contents. Always seek our professional advice specific to your circumstances before acting.