If you are thinking about starting a new business there are many factors to consider.  Firstly, which type of entity will you you be setting up?  If you are starting on your own you may wish to set up as a sole trader, if there is more than one person you may wish to set up a partnership with HM Revenue and Customs.

The other options are limited companies and limited liability partnerships with Companies House.  There are a number of reasons to choose either option, limited companies and LLPs enjoy limited liability, which means if you set a company up with one share at £1 then this is the extent of your liability if the worst happens and your business comes to an end.  Other reasons include risk (as your personal assets should be protected) and becoming a registered limited company portrays to prospective customers a sense of permanency.

There are a number of various different options but the ones above are the most common.  If you have for instance a rental property then you would also be required to complete a self assessment tax return, this is different to self employment and the main difference is self employed people pay class 2 & class 4 National Insurance Contributions on trading income.

Clients who complete a self assessment tax return could have employments with various employers, sole trader income, partnership income, investment income, bank interest and rental income all of which go onto the self assessment tax return and accountants then compute the taxes payable.

Tax planning and timing are key elements in running any business and potentially could save you money.