Starter  77.html 77.html Beauchamps High School

GCSE Business Studies Start-up, legal and tax issues Beauchamps High School

Will be able to evaluate the impact of taxation changes on a business Evaluation ~ GCSE Grade A* Will be able to propose reasons for taxation Synthesis ~ GCSE Grade A Will be able to analyse the importance of keeping records Analysis ~ GCSE Grade B Will be able to demonstrate understanding by using examples/cases Application ~ GCSE Grade C Will be able to explain the different types of taxes Comprehension ~ GCSE Grade D Will be able to recall key terms VAT Knowledge ~ GCSE Grade E

Starting up Beauchamps High School

Business Name  Must choose a name for the business. It must:  Be different from the name of other businesses  Promote the business Beauchamps High School Theory Notes

Yellow Pages Business Name Awards Ironing Bored (Ironing & Laundry Service) Bangers & Flash (Fireworks) Aquaholics (Diving Shop) Tree Amigos (Tree Work) The Lawnranger (Garden Services) Jim'll Mix It (Cement specialist) Goochi Poochi (Dog and Cat Groomers) Beauchamps High School

Keeping Records  All businesses have to keep records  Evidence of what has happened in the past  Records can be paper or in computer files  Most important records concerns tax Beauchamps High School Theory Notes

Keeping Records  Generally, non-financial company records (accident book) must be kept for 5 years  All financial documents (bank statements, receipts) must be kept for 7 Years Beauchamps High School Theory Notes

Keeping Records Beauchamps High School Theory Notes  Taxes are paid to HM Revenue & Customs  This is the government authority in UK responsible for collecting tax

Taxes paid  The taxes paid will depend on:  The amount of sales over a year  Whether or not workers are employed  Whether it is a sole trader or limited company Beauchamps High School Theory Notes

Taxes on small businesses Beauchamps High School

VAT  Value Added Tax  A tax on the value of sales  Paid by businesses to the government  Current VAT rate in UK 20% Beauchamps High School Theory Notes

VAT  VAT payments should be made each quarter to HM Customs and Excise  Small business must register for VAT if annual turnover is over £67,000 Beauchamps High School Theory Notes

Income Tax  If the business employs workers, it must take away income tax due by those workers on their wages and give to HM Customs & Excise  PAYE system (Pay As You Earn) Beauchamps High School Theory Notes

Income Tax  If businesses are sole traders, owners must pay income tax on their earnings.  This is the difference between sales revenues and expenses of running a business Beauchamps High School Theory Notes

National Insurance Contributions  Types of tax linked to a number of government benefits e.g. pension, incapacity benefit  To get these, the employee has to have paid a certain amount of National Insurance contributions (NICs) Beauchamps High School Theory Notes

National Insurance Contributions  Business has to deduct NICs from pay packet of employees and pass onto HMR&C  Business has to pay employers NIC – calculated as a proportion of the wages of employees  If the business is a sole trader, the owner has to pay a flat rate NIC PLUS percentage of net earnings Beauchamps High School Theory Notes

Corporation Tax  Only paid by limited companies  This is tax on the profits of a company  Key factor that influence entrepreneurs about whether to become sole trader or limited company Beauchamps High School Theory Notes

Against the Clock

Will be able to evaluate the impact of taxation changes on a business Evaluation ~ GCSE Grade A* Will be able to propose reasons for taxation Synthesis ~ GCSE Grade A Will be able to analyse the importance of keeping records Analysis ~ GCSE Grade B Will be able to demonstrate understanding by using examples/cases Application ~ GCSE Grade C Will be able to explain the different types of taxes Comprehension ~ GCSE Grade D Will be able to recall key terms VAT Knowledge ~ GCSE Grade E