Guidance and tips

When commencing a new business careful consideration need to be given as to whether it should be incorporated as a new limited company, added to an existing company, or operated as a sole trader or in partnership. This is because since 1 January 2009 the tax consequences of trading as Jersey limited company are dramatically different from those of an unincorporated entity.

Following the 0%/10% tax changes introduced on 1 January 2009 the use of Jersey limited companies for Jersey residents has fewer advantages than was previously the case. This is because of the complexity of the new tax system for the smaller trading entity when it is expected that over the life of the business all profits will withdrawn by the owners.

For the smaller Jersey trading company owned by Jersey residents a 31 December year end creates fewer potential tax issues than any other date, although it minimises the tax deferral period.

Consider financing the purchase of plant and equipment by way of finance leases to accelerate the tax relief available rather than using bank loans, overdrafts or hire purchase.

Consider computerising your business books and records to provide you with a comphrehensive and up to date information system. We recommend Quickbooks software in most instances and training on these packages can be provided.

Maintaining even simple accounting records helps us to reduce the time spent preparing your accounts and minimise our charges.

Ensure that all your business expenses are accurately recorded in your records to maximise the tax relief available. It will always be easier to agree a private usage proportion with the Comptroller of Income Tax than to justify round sum estimates of business expenses that have not been recorded. 

Consider carefully the date of business cessations as, from 1 January 2009, with a January year end you can be assessed on the last 23 months profits as the final assessment.