Advantages of Bank Loans

Reliability – Unless you break terms and conditions loans are very reliable and secure. You are assured the money for the duration of the loan and the odds of a bank or major lender requiring immediate pay back is minimal. Also, unless you choose a loan with a variable interest rate you will have complete transparency of what you owe and your repayments.

Cost – A bank loan is very reasonable in cost when compared to many other forms of finance. Though loans are in no way cheap, unlike credit cards and overdrafts they do not have the interest rates or charges, and you are not required to give up a portion of your business as you would with investors.

Equipment Life – When using a loan to buy equipment, you may be able to tie the loan to the usable life of the product; this will save you having to pay out in a lump sum for expensive machinery.

Understanding the two types of contribution you make as an employer.

As an employer you pay National Insurance on both your own earnings and those of your staff. These are based on Class 1 contributions and the payable amounts are calculated using the PAYE system for the employee. PAYE is applied to all the payments that an employee receives as a result of working for you, including:

• salary and wages
• bonuses and commission
• certain expenses allowances paid in cash
• Statutory Sick Pay
• Statutory Maternity, Paternity or Adoption Pay
• lump sum and compensation payments - like redundancy payments - unless they're exempt from tax
• non-cash items like vouchers, shares or premium bonds - you apply PAYE to the cash value of items like this

If you're a sole trader, member of a partnership or a company director you'll need to understand a little more about how taxations works

Each of the following points and subpoints are designed to help you understand what you need to do in regards to taxation compliance. If you can go down this list and not find any point you are either non-compliant with or uncertain how to comply you are on the right track!

• Make certain you register as self-employed within three months of working or starting to trade.

  • Failure to do so may result in a penalty of up to £100, plus interest on any taxes due.

• If you’re planning on running your business from home, you may have to pay business rates for the part of your home that you use for business purposes, depending on whether or not you use that part for domestic purposes as well.

• If you’re working from home, do you need planning permission? If you propose to make any changes to your house for business purposes contact the planning department of your local authority.

• Anyone who becomes self-employed must register for income tax and national insurance contributions with HM Revenue & Customs (HMRC). There are exceptions, check the HMRC website for a guide on self-assessment.

• This can be done either online, by phone or by post, however it is far quicker and more convenient to sign-up online.

• Upon registration, you’ll need to provide the following information:

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Keeping clear and accurate records is essential.

Unfortunately not the most fascinating area of running your own business but a very important one nonetheless. You cannot underestimate the negative effects of poor record-keeping on your business including disorganisation and paying excess tax. At minimum you have a legal requirement for everyone who pays tax to keep the records they need to fill in a tax return, for VAT registered businesses there are more specific requirements.

Simply put, though it can be a challenge and frustrating at times, it just makes good business sense to keep well organised and accurate records. If you can get this right in the early stages by setting up a system and sticking to it you'll find the process is a lot simpler to keep up-to-date.