Sole traders and partnerships must pay income tax on the net profit that the business has generated during the tax year (6 April – 5 April). Limited companies pay corporation tax, which is a set rate.
To work out your net profit, simply refer to your profit and loss account. However, remember to deduct all expenses that have been incurred by the business in the financial year. It is advisable to use the services of an accountant, who will be able to tell you which items are tax deductible. Such items may include the accountant’s fees!