Do you have a brilliant business idea, or just simply want to be your own boss?
If you are thinking of becoming self-employed you may be anticipating quite a complex and confusing process. However, becoming self-employed isn’t as scary as people think!
To help simplify the process, we have put together 5 key steps to get you started;
1. Register with HMRC within 3 months of starting self-employment (we can help you do this for free over coffee). You need to tell HMRC you are going to be become self-employed and will thereafter will be issued with a unique tax reference number or ‘UTR’ from the tax office.
2. Remember that the tax year runs from April 6th – April 5th each year. You can thank 2000 years of history for this, don’t be fooled into thinking it runs from January until December!
3. Keep a detailed log of all your income and expenditure. Absolutely everything – this will help the process run smoothly.
4. Every time you think you’ve incurred a business expense pop the receipt into a box file. This is our top tip to keep everything organised, then at the end of the tax year you have everything you need to complete a tax return. Make sure you also keep any P45’s or P60’s from previous employment.
5. Filing deadline is the 31st January every year – we do not recommend leaving it this late! We tell our clients to start thinking about the filing deadline during the summer months. If you leave it until the last minute, you can cause yourself plenty of unnecessary worry and stress! We work with our clients to keep ahead of the curve, the last thing we want is for you to stress about your finances.
How much tax do I pay when I’m self-employed?
The tax-free personal allowance and the tax bands are the same for self-employed and employed people. In the 2016-17 tax year you can make up to £11,000 before you need to pay tax and you’ll then pay the basic rate of income tax (20%) on income up to £43,000. The higher rate of 40% applies to income over £43,000, and on income over £150,000 you pay the additional rate of 45%.
Do I really need an accountant?
Preparing accounts, managing your books, and filing tax returns – this all takes time and effort. The great thing about working with an accountant is they save you time, stress and allow you to focus on running your business. Many small business owners will assure you it is money well spent!
Are you looking to become self-employed? We have a great track record helping small businesses set-up and would love to talk to you. Contact Andy on 01527 790151 or firstname.lastname@example.org for a coffee and a chat.