Legal Aspects of Running a Business

Launching a small business is a life-changing move for every businessperson. It brings a certain degree of excitement, together with passion for professional improvement. However, there is also another side of being a small business owner – the legal aspects of business conduct. Even before you make up your mind to start your own business tale, you need to master some legal basics, to work in accordance with the law from the beginning of your career.

The importance of a catchy name

Just try to think of a brand whose products you use and ask yourself whether or not you would use them if they had a different name. As you can see, coining a catchy name is one of the most important steps taken along the business-founding avenue. When you look at the names of some of the most famous global brands, they rarely have more than two words. Even if it is a case, they force the use of acronyms. So, try to think of a catchy phrase that would consist of your surname and a common noun depicting your basic business activity. Incorporating your own surname into the name of your business is especially important when it comes to local small businesses. Also, check if the name you wish to give to your business is already taken. For instance, businesses in Australia can check the availability of business names by following this link.

What business type is your type?

This is probably the hardest decision to make when you want to launch your own business. Your whole business policy will depend on the type you choose for your business. From your own personal taxes to your income and your employees’ wages, the type of your company will determine your collaboration with the tax and insurance authorities. Basically, businesses that do not exceed the number of five shareholders should register as Limited Liability Companies (LLC). Also, you can also choose to register as an S corporation. It offers its shareholders a limited liability, but the earnings and losses are part of their individual tax returns. This type of business must have up to 75 shareholders. Finally, a C corporation is an option for larger players, who are planning to go public in the near future. It is based on stocks and is considered a single entity by the tax authorities.

Get in touch with the taxman

No business can work without the knowledge of the tax authorities. So, once you have registered your enterprise, it is time to go and ask the tax authorities in your region, state or country to give you your very own tax identification number. It will be your main business number, with which you are going to pay all your business-related taxes. What is interesting it that this number is called differently in different countries. For instance, in the USA it is called the employer identification number (EIN), while in Australia they call it the tax file number (TFN). In UK, it’s called the unique taxpayer reference (UTR).

Education on employees’ rights

Only sole proprietors do not have a right to hire employees. All other types of businesses are allowed to recruit workers in order to achieve better business results. You have to learn how the payroll is calculated and when the incomes of your workers are taxed. Furthermore, it is necessary to follow the strict anti-discrimination rules and regulations, since this is a delicate area. Also, you have to know when you are obliged to give them a day off, as well as how much they should be paid for overtime work. Since this is a wide area which can be very important for your everyday work, it would be smart to seek business legal advice, so as to avoid unpleasant mistakes.

The legal side of entrepreneurship raises numerous questions. Businesspeople should try to learn as much as they can about the finance and business law. However, sometimes consulting an expert is the only reasonable option to keep their business actions on the bright side of the law.

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A Hangover Cure for Your January Finances

Christmas is a busy time for many small businesses. Paying wages early, an expensive Christmas party, and the increased chance of being paid late by your customers all mean you might find yourself in pain in the first few weeks of the New Year. And just as people make resolutions for themselves at the start of the year, many businesses get ready to hit the ground running in January. It’s not an ideal time, then, to be hit with a big tax bill. But this is exactly what happens to a huge number of businesses in the UK — whether it’s PAYE, VAT, or even corporation tax that’s due, a lot of different quarterly or annual bills can come up in January.

So what can business owners do to avoid a financial hangover caused by their January tax bill?

We’re not going to suggest raw eggs, hair of the dog, or a cold shower — but here’s a few ways you can shake it off and get your business’s New Year’s resolution back on track.

What are the implications if you don’t pay your tax bill?

It’s risky business to delay paying tax you owe. Last year, they ordered 3,000 businesses to shut down because of late tax bill payments. Of course, in some cases, businesses receive a slap on the wrist. This might tempt you to take your chances, but it’s really not worth the risk, and here’s why:

If HMRC take enforcement action because you haven’t paid your tax bill, it can cause your business serious problems. They might take you to court, pass your debt on to a debt-collection agency, or even close down your business. None of those options are good — and it doesn’t matter if you can’t or won’t pay.

So the best thing you can do is pay the bill as quickly as you can. If you don’t have enough working capital to do it, or paying the bill in full would leave you in a tight spot in terms of cashflow, short-term finance might be a good idea. If you’re really struggling, talk to HMRC!

Be honest with HMRC

It sounds obvious, but keeping the lines of communication open is really important in times like this. It’s no use running around trying to get the funds together to pay if HMRC don’t know — they could take enforcement action in the meantime. So make sure you’re honest and open with them, and they know that although you can’t pay now, you’re making plans to do so.

Bear in mind that if HMRC agree for you to delay payment or pay in installments, you’ll still have to pay interest and late fees. In other words, coming to an agreement with HMRC might save you from enforcement action, but will still leave you worse off than paying the bill in full before it’s due.

If you need any more convincing that it’s a bad idea to delay paying HMRC, bear in mind that many lenders will turn you down for finance if you have an outstanding tax bill, which limits your options even further. Overall, you need to be proactive and make a plan — with an overdue bill from HMRC, the absolute worst thing you can do is nothing.

What can you do about it?

If you don’t have the working capital to pay your tax bill outright, you might consider getting short-term finance to see you through the first few weeks of the New Year. At times like this, your accountant could prove very useful — talk to them to figure out an action plan, and see if there is any wiggle room on your balance sheet.

As we’ve seen, if at all possible the best thing you can do is pay the bill in full as soon as you can. If doing that leaves you without much working capital left over, think about what would happen in an emergency. And if there’s no way you can pay it, look at all your options — talk to HMRC, and think about approaching finance providers if you need to bridge the gap. Here are some of the options worth considering:

Overdraft alternatives

If you don’t need a huge amount to make up the difference, a cashflow facility similar to a bank overdraft makes sense. Lenders differ in exactly what they offer, but generally you’ll agree a maximum limit, borrow up to it whenever you need to, and only pay interest on what you use — useful for short-term hiccups like a big tax bill after Christmas!

Short term loans

Term loans aren’t as fashionable as peer-to-peer lending (or so-called ‘marketplace lending’) at the moment, but could be perfect for getting you through a few weeks or a few months of temporary difficulty. They’re suitable for a wide range of businesses, although you will need some kind of security or a robust trading history.

Invoice finance

If your firm trades on credit, January can be particularly bad for late-paid invoices from clients. With invoice finance you can get an advance of cash before your client has paid, so you don’t have to be left hanging. That means you can pay your bills on time, even if your customer isn’t doing the same!


Tax bills catch everyone by surprise — believe it or not, even accountancy firms can get a nasty surprise from HMRC in January. It’s always going to be hard to come up with a lump sum, particularly for the larger quarterly or bi-annual payments, so be prepared and have a plan. If it doesn’t work out perfectly, there’s a range of alternative finance that can help.

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5 Smart Strategies to Manage Your Taxes after a Windfall

Coming into a large sum of money can be exciting! The thoughts of what to do first with the money are likely racing through your head. Whether you thought of vacations, a new home, a new car, or a new puppy, did the IRS cross your mind during those thoughts? They probably should as they are going to come knocking on your door; so to speak, collecting the money they are owed on your newfound income. Unfortunately no income is safe from the IRS. This could put a damper on your celebrations, but if you know upfront what to expect and how to minimize its affects, you can make the most of your money and minimize your tax penalties in the end. Let’s look at ways to manage your taxes after a windfall.

Think Long Term

While your head might be spinning with ideas of your next vacation, new car, or a new wardrobe, you should think more long-term with your new income. Retirement is a great place to start because not only does it allow you to have money set aside for when you are ready to stop working, but it has tax savings as well. Consult with a tax professional to see the maximum amount of money you can contribute to an IRA or 401(K) this year and still have the money be deducted on your taxes and then take advantage of that figure! Yu kill two birds with one stone with this tip, and pay the IRS less in the long run. As an added bonus, if you do contribute to a 401(K), your employer might match all or a fraction of your contribution, giving you evens more money for retirement.

Give to Charity

Most everyone wants to give something to charity when they come into money. There are several ways to do this. You can give them a lump sum and write it off on your taxes or you can set up a Donor Advised Fund, which works similar to the way a trust would that is set up for a child. The charity is given a certain amount of money at the intervals that you determine. This allows you to write off the charitable contributions for that length of time while doing some good with the money you have obtained. Either way that you decide to give, your contribution will be tax deductible.

Pay Estimated Taxes

No one likes to think about paying taxes when they earned a large sum of money, but it is necessary. If you are worried about what you will owe, why not pay estimated taxes now before April 15th arrives? You can talk to a tax relief experts to see how much of your new money should be put towards taxes and send it in to the IRS. When it comes time to file taxes, you will get the money back if you overpaid. On the other hand, if you under pay or neglect to pay at all, the IRS will hit you with penalties and fees that are not pleasant to pay.

Go to School

Have you always wanted to go back to school? Now is a great time and you can afford it! Without student loans, you have the ability to write off your education expenses. This allows you to save money that you owe to the IRS while bettering yourself with a higher education. Whether you go to school in order to get a better job or you do it for personal reasons, the result is the same when it comes time to file your taxes.

Get a Timeshare

Timeshare property taxes are usually deductible on your tax return, just like the property taxes on your primary residence. If this is the case for you, invest in a timeshare where you and your spouse typically vacation and use it often! This allows you two benefits with your windfall – you get the vacation you dream of when the money hit your hands and you get a tax deduction for a portion of it. This can help to decrease your tax liability, allowing you to avoid tax relief programs when April 15th comes, such as an installment plan or asking for an extension on what you owe. No one wants to deal with excessive taxes, and this is one of the most exciting ways to deal with it.

Once the excitement of a windfall wears off, it is time to figure out how you are going to manage your money. It is best to talk to a professional before doing anything as excitement can get in your way of making smart decisions. Any decisions that you make should have your taxes at the forefront of your mind. You do not want unpleasant surprises come next April, when your money is already spent and yet you owe the IRS a large sum of money. Understand your tax obligations now and the ways to overcome them in order to have the most success possible.

Share this article in your social media circles – you never know who might have come into a windfall. You could prevent them from making mistakes that could cost them a lot of money!

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