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TECHNOLOGY REPORT

their business structure. In particular, dends.” Premises
she says that “a company is a separate It follows that profits depend not just on sales, but also on Lastly, there’s the matter of choosing
legal entity, which gives the owners expenses that can be offset for tax purposes. Many in business are premises which is littered with booby
more protection if something goes surprised to find out, as Thornley highlights, that “profits are cal- traps. Landlords invariably write con-
wrong. And in the event that the com- culated differently for tax compared with how they may be shown tracts in their favour with, for example,
pany can’t pay its debts, the sharehold- in business accounts”. clauses covering ‘dilapidations’ (where
In general, she says that provided expenses are incurred wholly
ers’ liability is normally limited to the and exclusively for the business, they should be allowable as a tenants may have to pay to repair prem-
amount they paid for their shares unless deduction against business income. This includes many of the ises both before and after rental), high
they’ve given personal guarantees”. everyday running costs such as rent, rates, insurance, wages, insurance or common usage charges,
However, she details that “running a office stationery, heat and light. infrequent ‘break clauses’ that make it
company brings more responsibilities However, there are complications. Thornley says that capital hard to end a lease part of the way
and directors must accept certain legal items which a business may use over a number of years such as fix- through, or upwards only rent reviews.
duties, including that of acting in the tures and fittings, computers, printing machinery and vehicles are Using a good surveyor or lawyer is essen-
best interests of the company”. treated differently for tax purposes with relief is given in the form tial to get through this maze. A member
Indeed, there are countless stories on of capital allowances. She says that “in most cases, full relief will of the Royal Institution of Chartered
Printweek of directors having been be available, but care should be taken – especially with cars as Surveyors is an expense worth incur-
banned for breaching their duties to the firms may not get the tax relief in full in the year of purchase and ring.
company or for breaking the law. users could have to pay a benefit in kind if it’s used privately”.
And to get the best out of the tax system, Thornley advises that
Further, while a shareholder-director the simplest approach is to keep a record of all potential business Summary
might own and run the company, costs, together with supporting evidence such as invoices, before This is but a light touch on a very com-
Thornley says that “that doesn’t mean discussing the position with the accountant at the end of the year. plex subject. But while no-one ever said
that they can dip into company bank Lastly, on VAT, Thornley says that there are schemes to help that running a business was easy, it does
account when they feel like it. Instead, both small and young businesses ease their way through the offer plenty of freedoms and rewards.
monies must be extracted – either by
regime such as Annual Accounting (just one VAT return a year),
Setting up for the first time paying salary or by voting dividends out Cash Accounting (VAT based on monies paid and received, with The key, though, is good advice.
automatic debt relief) and the Flat Rate Scheme (a fixed percent-
of company profits”.
Case study: Minuteman Press
age of turnover with less admin). An accountant can advise fur-
Solicitors can be found via the Law
Society’s website. ther on each. Oxford
Owner of a Minuteman Press fran-
Tax Staff chise in Oxford since August 2010,
Misunderstanding – deliberately or Staff and related issues can prove extremely hazardous if good Amad Hassan, previously worked at the
otherwise – can be a recipe for disaster. advice isn’t sought. Employees and job applicants have rights and BMW plant in the city for some 10 years
For this reason, businesses and their will try to enforce them. Further, the law places obligations on helping make the Mini. He says that he
owners need to tell HMRC at the earliest employers to, for example, ensure the legal right of someone to had for some time wanted to start a busi-
opportunity about the new enterprise. work in the country, handle dismissals in a given way, and follow ness, but the impetus to begin his jour-
Individuals will need to start filling out health and safety legislation. Firms are best advised to consult a ney came from being fed up “working
self-assessment returns and will be solicitor on employee contracts, recruitment and employment shifts at BMW – both days and nights –
responsible for paying their own with not much of a lifestyle that I could
National Insurance while incorporated processes, and holiday and sick pay to name but a few key areas of enjoy with the family”.
entities need to register to pay employment law. Advice can also be obtained from Acas, a gov- So, as he tells, he started looking for a
Corporation Tax. ernment funded, but independent organisation. franchise that would offer him a stable
In all probability, most will incorpo- Beyond that, Thornley says employers must supply a written
rate for the reasons stated above. And as statement of the main conditions of employment within two platform for a business. “I came across
with the legal duties that are attached to months of the employee starting work, regardless of whether an Minuteman Press and met a representa-
a corporate structure, so Thornley employment contract is put in writing. Also, she points out that tive of the company who showed me
details that operating this way brings as “there’s the need pay staff the National Minimum Wage appropri- some franchise sites and explained how
much complexity for tax purposes. She ate for their age and also, potentially enrol them into a workplace they work.” Hassan needed a little reas-
explains that “the company itself will pension”. surance since, as he outlines, “I didn’t
pay Corporation Tax on its taxable prof- And from a tax perspective, employers must register with have any experience with print” and had
its. For small companies, this is due as a never been in business before. To say
single payment nine months after the HMRC to obtain a PAYE reference for the business and tell that he “was bit nervous” might be an
company’s year-end. In addition, the HMRC every time a new member of staff is hired. But Thornley understatement. As Hassan summa-
individuals involved will pay Income says that there’s more: “Each time you pay your staff, you need to
Tax and National Insurance on any deduct income tax and employee’s national insurance, calculate rises, “I’ve now been with Minuteman
money that they have taken out of the your employer’s national insurance liability and report these fig- Press for 13 years running – and am run-
company in the form of salary or divi- ures to HMRC on or before the date of payment.” ning a successful business.”

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