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How To Start A Business -Two’s Company. Anyone can start trading and just place any income into their personal account; this iswhat is known as a sole trader. The problem with that is that you are taxed on all of your income after allowable expenses, and you pay National Insurance on these earnings. You will also have to register with HMRC as self-employed. However, if you set up as a limited company, the company is treated as a separate entity. So, there are in effect two entities involved; yourself (the director), and the business entity. Tax-wise, you are taxed separately from your business. Your limited company will only be taxed on its profits and the company will not pay National Insurance on those earnings.Big difference! A limited company, however, will be required by law to file accounts with Companies House once a year and also file other documents such as annual returns, so you will need an accountant. If you are late filing, the fines can amount to several hundreds of pounds... © Copyright 2019 Business Zero To Superhero.
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