[UK] Calculating Corporation Tax & Costs of Sales
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[UK] Calculating Corporation Tax & Costs of Sales

Looking at starting my own consultancy business over the coming months and so i'm writing a business plan and creating a P&L forecast.

Q1: I'm trying to work out what I pay corporation tax on and when. Can someone correct my understanding if it isn't correct?

  • Corporation tax in the UK is 19% and is deducted from net profit
  • Net profit is the revenue generated minus any costs involved in providing our services (i.e - staff wages, pension contribution, NI, office rent, etc)
  • Corporation tax is paid 9 months after the companies fiscal year end. Does this mean that if i reduce the net profit (i.e - pay staff bonuses) then that would reduce the net profit thus the taxable amount?

Q2: The definition of 'Cost of Sales' confuses me as there are conflicting websites. From a manufacturing perspective, I understand the cost of sales to be things like materials. How does this work with a consultancy where the majority of cost is labour? Is this also considered 'Cost of Sales' or is this more in 'Operational Costs'?

If anyone has any books or websites they'd recommend for starting up a small SME consultancy business, i'd really appreciate the direction!

Thanks in advance

submitted by /u/Wazza_26
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