What Taxes Do You Need to Pay as a Small Business? A Beginner’s Guide

“I’ve started my own business — when do I start paying tax?”

A question I get more often than you’d think, and fair enough — nobody launches a start-up because they love HMRC forms. If you’re just getting going, or simply never got a straight answer, this guide will give you the lay of the land. No fluff, no accountantspeak — just what you need to know.

So, what taxes are we actually talking about?

Here’s a breakdown of the main culprits:

• Corporation Tax
  If you run a limited company, you’ll pay Corporation Tax on your profits. The current rate is 25% for profits over £250k, with lower rates for smaller profits. It’s filed annually via your company tax return.
• Income Tax (if you’re a sole trader)
  Instead of Corporation Tax, sole traders pay Income Tax on business profits — that’s after deducting allowable expenses.
• National Insurance
  Both sole traders and limited companies pay NI in various forms. Class 2 and 4 for sole traders; Class 1 for directors and employees. You’re not alone in being confused — even the pros double-check this one.
• VAT
  If your turnover hits the £90,000 threshold (as of 2024/25), you’ll need to register for VAT and start charging it. Lots of small businesses do this voluntarily too — which can be clever or a faff, depending on your setup.
• PAYE (Pay As You Earn)
  Employing staff or paying yourself a salary? You’ll need to register for PAYE and sort out tax and NI at payroll level.

And then there’s Self-Assessment…

If you’re a sole trader, a company director, or you have untaxed income (like dividends), you’ll likely need to file a Self-Assessment return every January. Set a reminder — or I guarantee you’ll remember on the 29th.

What should you be doing now?

• Make sure you’re registered for the right taxes
• Keep clear records from day one (yes, a shoebox of receipts counts… but just barely)
• Set money aside for tax so you’re not blindsided
• Work with an accountant (hi 👋) to avoid late fees, panic, and sleepless nights

Conclusion
You didn’t start a business to become a tax expert — but knowing the basics helps you stay out of trouble and plan ahead. If you’re not sure if you’re registered for everything you should be (or you think you might be paying more than you need to), I can help.

Book a call with me today — and let’s make sure you’re covered, confident, and tax-smart.

“Nothing is certain except death and taxes. But one of those can be planned for.” – Me (and probably Benjamin Franklin)