Understanding Business Taxes for Mum Entrepreneurs

13 Mar

Hi MOBsters!

We hope you're having a fantastic month! At Mums Who Build, we support mums in taking control of their finances and creating financial security. This week, we’re covering business taxes—an essential topic for any mum running a business or thinking about starting one. As Jo Dean, an award-winning financial advisor, shared in our latest Instagram Live, understanding taxes is crucial for running a successful and financially stable business.

Whether you’re a sole trader, limited company owner, or in a partnership, knowing the key taxes that apply to your business can help you plan efficiently and avoid surprises.

1. Key Business Taxes to Know

Jo explained that business owners should be aware of these core taxes:

✅ Income Tax – If you're a sole trader, your earnings are taxed as personal income through Self-Assessment.
✅ Corporation Tax – If you run a limited company, you’ll pay corporation tax on company profits.
✅ Dividend Tax – If you take dividends from your company, dividend tax applies at different rates.
✅ VAT (Value Added Tax) – If your turnover exceeds £85,000 per year, VAT registration is required.
✅ National Insurance Contributions (NICs) – Applies to both self-employed individuals and employers.
✅ Capital Gains Tax – If you sell business assets or your business, Capital Gains Tax (CGT) may apply.

💡 MOB Tip: Keep detailed financial records to help you stay on top of tax deadlines and take advantage of any tax allowances available.

2. Choosing the Right Business Structure

Jo highlighted that how you set up your business affects how you pay tax. The three main structures are:
✅ Sole Trader – Simplest setup, but you are personally responsible for business debts and taxed as an individual.
✅ Limited Company – Provides legal separation between you and your business, but requires filing corporation tax returns.
✅ Partnership – If you run a business with someone else, profits are shared and taxed as personal income.

💡 MOB Tip: If you're unsure about which structure is best, speak to an accountant to explore the tax implications of each option.

3. How to Pay Yourself as a Business Owner

Jo explained that how you pay yourself depends on your business structure:

Sole Traders: Earnings are considered personal income and taxed accordingly.
Limited Company Owners: Can withdraw money through a salary or dividends, each with different tax implications.
Partnerships: Profits are divided among partners and taxed as personal income.

💡 MOB Tip: If you're unsure about the most tax-efficient way to pay yourself, speak to an accountant for tailored advice.

4. Pension Contributions & Tax Efficiency

Jo highlighted that pension contributions can be a tax-efficient way to take money out of your business.

You can contribute money directly from your business into a pension. When making this contribution, you do not pay income tax, dividend tax, national insurance or corporation tax

💡 MOB Tip: If you haven’t considered setting up a pension through your business, now might be a good time to explore the benefits.

5. Business Growth & Tax Considerations

Jo emphasised that as your business grows, your tax responsibilities may change. Here are key things to plan for:
✅ VAT Registration – If your annual turnover exceeds £85,000, you must register for VAT.
✅ Hiring Employees – If you hire staff, you’ll need to manage PAYE tax and National Insurance.
✅ Profit Planning – As your profits increase, thinking about tax-efficient strategies is even more important.

💡 MOB Tip: Plan ahead so tax obligations don’t catch you by surprise—set aside money regularly to cover expected tax bills.

6. Seeking Professional Support

Jo emphasised that while it’s good to understand business taxes, working with a qualified accountant ensures you remain compliant and tax-efficient.

Jo does not provide accountancy services but can recommend trusted accountants she works with.
A professional accountant can help you identify deductions, manage tax filings, and plan ahead.

💡 MOB Tip: Seeking expert advice can help reduce tax stress and ensure you’re making the most of your business income.

Join Our Monthly Instagram Live with Jo Dean

📅 Mums Who Build hosts a FREE monthly Instagram Live on the last Monday of each month with Jo Dean!
📲 Join us to:

Ask your finance questions live.
Gain expert insights
Learn how to make smart financial decisions for your business.

Final Thoughts

We hope this blog helps you understand the key business taxes you need to know. Keeping on top of tax obligations is a crucial part of running a financially successful business.

💬 We’d love to hear from you – What’s your biggest challenge when it comes to managing business finances? Drop your thoughts in the comments below!

📅 Don’t forget to join us at the end of the month for our Instagram Live with Jo Dean!

Who is Jo Dean?

Jo Dean is an award-winning financial advisor and was named ‘Woman of the Year, Investment Advice’. She helps clients simplify their path to financial security through personalised strategies. Her expertise covers tax mitigation, retirement & investment planning, asset protection, estate & inheritance planning, and cash & currency management.

🚀 How Jo Can Help:
Jo takes a tailored, bespoke approach to financial planning, recognising that no two individuals share the same financial journey. Her ability to see the bigger picture and build trust with clients ensures that financial strategies align perfectly with individual aspirations.

📲 Want to connect with Jo for personalised financial guidance? Reach out to her via LinkedIn or contact her directly at jo@avantiwm.co.uk | 07972 114 038. Jo can also recommend accountants for those needing tax or accountancy support.

🚨 Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always seek professional guidance for your unique circumstances.

MOB MOBSTER