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How to file business taxes

Whether you're a sole trader or the owner of a limited company, it's crucial you know how to file business taxes. Failure to do so can result in hefty penalties and fines, so it's important to stay on top of your taxes, and we're here to explain how.

As a sole trader, you and your business are one and the same. However, as the owner of a limited company, you are a separate legal entity from your business. That is, if there were ever any financial or legal disputes, in most cases, the company would be liable, not the owners.

The differences in these two business structures also extend to the type of taxes you’re liable for and how to file business taxes.

  1. Sole traders pay income tax and National Insurance Contributions
  2. Limited companies pay corporation tax, and (where applicable) VAT, Employer National Insurance Contributions, and the personal tax liabilities of company directors

In this post, we’ll guide you through the process of how to file business taxes and accounts if you own a limited company or if you run a business as a sole trader.

Companies House: How to file accounts

As a limited company, you’ll need to file your accounts with Companies House each year and file your company tax return (CT600) with HMRC at the same time.

First, we’ll cover when and how to file audited accounts with Companies House.

When to file your company accounts

Refer to your accounting reference date to calculate the deadline for filing your accounts.

  • For a new company, this date will be the anniversary of the last day in the month the company was incorporated
  • For existing companies, this date will be the anniversary of the day after the previous financial year ended

You have nine months from your accounting reference date to file your accounts. Register for reminders from Companies House to avoid missing a deadline.

How to file audited accounts with Companies House

Online is the quickest, easiest, and safest way to file your company accounts.

You’ll need a Companies House password and authentication code to do this. Sign in/ register to WebFiling to do this.

  • Once logged in to the Companies House online portal, search for the company you’re filing for and select it
  • Within your company profile page click on ‘file accounts’
  • Follow the online prompts to answer a selection of ‘yes and no’ questions, submitting the required information where necessary
  • Check your prepared full accounts meet the criteria outlined
  • Review your content, approve your accounts, and submit them to Companies House

Following your submission, you’ll receive two emails:

  • One to let you know the accounts have been received
  • One to let you know if the accounts have been accepted or rejected

What if you don’t file your accounts with Companies House?

If you, as a company director, don’t file your accounts at Companies House you’ll receive an automatic penalty. This penalty is doubled if you fail to file your accounts on time two years in a row.

You can also be fined and struck off the register if you don’t send Companies House your accounts or confirmation statement.

Read the rules and requirements for filing annual accounts with Companies House here.

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How to file a company tax return

Now you know when and how to file your company accounts, let’s cover how to complete a company tax return as a limited company. This does not apply to you if you’re self-employed as a sole trader or in a partnership. Instead, scroll down to learn about self-assessment tax returns.

A company tax return, also known as a CT600, must be submitted by those who own a limited company. It reports a company’s spending, profits, and corporation tax figures to HMRC.

How to file a CT600

When you register your limited company with Companies House, you’ll register for corporation tax and PAYE as an employer.

If HMRC thinks your company is likely to owe corporation tax, you’ll receive a ‘notice to deliver a company tax return’. You must submit a company tax return even if you’ve made a loss or have no corporation tax to pay. You can do this via HMRC online services.

The responsibility lies with you as a company owner, so if you don’t receive a notice, but think you owe tax, contact HMRC to avoid prosecution.

What does a company tax return include?

A company tax return should show:

  • Your company’s profit/loss for corporation tax (this is different from the profit and loss in your annual accounts)
  • Your corporation tax bill

The accounts and computations part of the limited company tax return must be in the Inline eXtensible Business Reporting Language (iXBRL) format.

This government guide will help you prepare your company tax return (CT600).

Many limited companies turn to a qualified accountant to complete their company accounts and company tax return on their behalf.

How much does an accountant cost?

When to submit a company tax return

There isn’t a universal deadline (as there is with self-assessment), but you must submit your company tax return 12 months after the end of the accounting period the return covers. Usually, this is the same as the financial year covered by your company’s annual accounts.

How to submit a corporation tax return

You need to complete your company tax return in order to know whether you have to pay a corporation tax bill, therefore the two are normally submitted at the same time.

The deadline to pay your corporation tax bill is normally nine months and one day after the end of the accounting period.

What income does a limited company pay corporation tax on?

As a limited company, you’ll pay corporation tax on your profits, starting at 19% for businesses with profits under £50,000, and the main rate of 25% for profits above £250,000. Companies with profits between £50,000 and £250,000 will pay tax at the main rate, reduced by marginal relief.

Corporation tax should be paid on:

  • Trading profits (the profits you make from doing business)
  • Investments
  • Chargeable gains (selling assets for more than they cost). Assets include land and property, equipment and machinery, and company shares.

Submit your company accounts and company tax return together

If you own a private limited company that does not require an auditor, you can use the company accounts and tax online (CATO) service to file your accounts to Companies House and your company tax return to HMRC together, if they’re for the same accounting period.

For more useful information, read our beginner’s guide to setting up a limited company.

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How to file taxes for self-employed

This section is for those who are self-employed as opposed to being the owner of a limited company.

To file taxes as a self-employed tradesperson, you will first need to register for self-assessment with HMRC.

If this is your first tax return, you’ll need to register for both self-assessment and Class 2 National Insurance. You’ll do this using your Government Gateway ID and password to sign in (you can create one via the above link if you don’t have one).

Within ten days, you’ll receive your Unique Taxpayer Reference (UTR) in the post. You’ll need your UTR to file your tax return. You’ll receive a reminder via post or email telling you to complete a self-assessment tax return before it’s due.

Once you’re registered and have received your UTR, read our guide to completing your self-assessment tax return as a sole trader.

How to complete self-assessment as a sole trader

How to pay taxes when self-employed

There are a number of ways to pay your taxes when self-employed, including online banking, via CHAPS, by debit or corporate credit card, or at a bank or building society.

For more tips for completing your self-assessment tax return, especially if this is your first year of trading, read our guide to self-employed tax returns.

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How do I do my taxes as a beginner?

Keep accurate and organised financial records throughout the year and make sure you file your taxes before the deadline to avoid penalties. Using the appropriate online service is the quickest and easiest way to do your taxes as a beginner, i.e. to find out how much tax you owe. Then, make sure you plan for how you’ll pay your tax liabilities by the due date. Some self-employed people put 30% of their income aside each month to save toward their tax bill.

Is it easy to do your own tax return?

If your finances are relatively straightforward and you know what you’re doing, it’s fairly easy to do your own tax return. Paying an accountant to file your taxes for you will free up your time and make sure your business is tax efficient, i.e. you’re not paying more tax than is necessary.

Can I file company accounts myself?

Yes, if you feel confident to file your company accounts yourself, you are entitled to do so.

Do I need an accountant to file company accounts?

Legally, you don’t need an accountant to file company accounts, but many companies will choose to instruct a qualified accountant, who can also offer business and financial advice.

What needs to be included in company accounts?

Company accounts will normally include a profit and loss account, a balance sheet, notes, and a director’s report. In some situations, an auditor’s report may also be necessary.

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