Part 2 of my guide to self employment will cover the steps which you need to take to register yourself as self-employed. If you’ve not done so already I would recommend reading Part 1 of the series which talks about what you need to consider before starting out on your business venture.
If you are certain that self employment is for you the next steps are to inform the relevant authorities that you are now working for yourself:
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1) You have to inform HMRC when you begin self-employment. This is very easy and can be done online, this previous blog post has the information you need.
2) Do you need to register for VAT? If your turnover is expected to be above £77,000 per year you have to register for VAT. There are several schemes which you could use and they could actually save you money. It’s worth seeking advice before registering for VAT, below are 2 blog posts which explain how you could save money by registering for VAT:
3) It is advisable to find a bookkeeper or accountant to help you compile your accounts and help you look after your financial affairs. Whilst you will be paying for their services on a monthly basis, over the course of the year their help will be worth it’s weight in gold as they will help you save money, tax and deal with HMRC for you if needed. Reducing stress is a major bonus for any business owner
4) Once you have chosen your bookkeeper/accountant the next thing you should do is send off form 64-8 to HMRC. This is a form which will register your bookkeeper/accountant as your agent, which means that they can talk directly to HMRC about your tax affairs. This is very advisable and will also cut down on the admin work you have to do. You’re paying for someone’s services, make sure you get you put that money to good use!
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The next blog in the series will look at how you can become more organised with your paperwork to help reduce the time that you spend on administration tasks. If there are any topics you would like covering, please let me know.
Whilst major business are struggling and failing in the tough economic climate, many small businesses are experiencing the opposite and are thriving. It’s never been easier to start your own business and become self-employed. If you are thinking of making that step and turning your talent into a business, take a few minutes to watch this inspirational video that I have found…
If you have a skill or can provide a service that other people would buy, you should consider working for yourself as self-employed/sole trader. With the current economic climate as it is substantial pay rises from your employer are not likely. Becoming self-employed alongside your main job is suddenly an appealing idea; the extra income will be very welcome as the cost of living continues to soar.
But how do you register as self employed? It’s unbelievably easy. All the information about registering for Self Assessment can be found here. The direct link for registering your self as a sole trader can be found here. Once you’ve done this HMRC will have you listed as a sole trader and will inform you that they expect you to complete a tax return at the end of the financial year.
Remember that when you do work for yourself you need to keep accurate business records in order to complete you year end tax return.
If you need any help or advice with this please contact me sooner rather than later and allow me to compile your business’ accounts and complete your tax return, whilst you focus on running your business.
If you are registered as self-employed the UK tax year runs from 6th April until the 5th April the following year.
All transactions relating to your business during this time should be collated to form your accounts for that period, and the final figures transferred over onto your self assessment tax return.
The deadline for filing the paper copy of your tax return is the 31st October
The deadline for filing your tax return online is the 31st January.
All tax due must be paid by the 31st January, along with any payments on account that you need to make.
If you need any help with your self assessment tax return please contact me via email or phone – 07833 562 674
You’ve got the idea, you’ve got the skills and most importantly you’ve got the motivation to become self-employed. But do you know how to register as self-employed with HMRC?
Thankfully it is not as difficult as you may think – you can either fill in one form which can be found here – Form CWF1 , or you can fill in the same form online at the HMRC Website. Both are very easy to do and I recommend using the online version as there is always the chance that the paper form could go missing in the postal system.
Great news, you’ve loaded up your email this morning to find an email and a form from HMRC advising you of a tax rebate, all you need to do is fill out the form and send it back online and the money will be with you shortly.
STOP!
It’s a scam. HMRC will never send notifications of a tax rebate via email, or ask you to disclose personal information via email. At the time that most people have just filed their tax returns you can expect to receive a few of these. If you do, please delete them straight away and do not click on any of the links in the emails. More information can be found here
If you do think that you are due a tax rebate call HMRC directly to discuss it with one of their call centre agents
Welcome to Part 2 of my guide, aimed at helping you start self-employment correctly. If you missed Part 1 you can read it here
So far you have registered with HMRC as self-employed, chosen your business name and (hopefully) not annoyed the neighbours if you intend to work from home. What next?
4. Do you need to register for VAT?
If you expect to have turnover of more than £73,000 you will need to register for VAT. The easiest way is by doing it online. If you are a business which primarily offers a service and does not make many purchases, if may be more beneficial for you to register for the Flat Rate Scheme (conditions apply). This can help simplify your accounting process as you pay a set percentage of your turnover as VAT. You can register for VAT voluntarily if you wish.
5. Do you need to register for PAYE?
If you intend to employ other people in your business you will need to make PAYE and NIC payments which will mean you have to operate a Pay As You Earn (PAYE) system. You can learn more about PAYE here
6. Set up a record keeping system
You must document and keep detailed records of all transaction that take place within your business. Even if it is just a folder to store your receipts and invoices in order. If anyone asks you ‘Show me proof of X,Y & Z’ you will be expected to produce the relevant documentation. This blog posting gives you some advice about how to keep your records in order
You’re now up and running as a self-employed sole trade. Come back for the final installment tomorrow to put the finishing touches to your business
Over the next 3 days I will post a series of blogs walking you through some important aspects of becoming self-employed as a sole trader. If you follow this advice you will be trading correctly from the first day you start business.
1. Register with HMRC as self-employed
This is the most important thing to do and should be done straight away. It’s quick and easy – all you need to do is fill out 1 form and send it back to them. The form is called CWF1 and can be downloaded from here
2. Choose your business name
Your trading name should not be the same as, or very similar, to one that already exists. You should also take care to ensure that the business name does not cause offence or is misleading to anyone
3. Business rates & planning permission
If you are planning on running your business from home you may have to pay business rates on the portion of your home that you use for business. However, you may not have to pay rates if the space you use is also used as a spare bedroom for domestic purposes.
If your business is likely to cause a nuisance to your neighbours or you need to make building alterations to your home, you may need planning permission. Speak to your neighbours prior to commencing any trading and explain what you are going to be doing, you may find that they are very understanding.
Don’t forget to come back tomorrow for Part 2, or follow me on Twitter to be alerted when the post is published
Posted by Rob Scott | Posted in HMRC, Tax Return | Posted on 18-01-2012
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If you were self-employed in the tax year 2010/2011 time is running out to file your tax return.
The deadline for the paper returns has long since passed (31st October) but you can still file your tax return online, and must do so by the 31st January. If you don’t you will receive a fine which starts at £100 and could rise to as much as £1,600.
If you are already registered for self assessment online, don’t delay it any longer and get the return filed. If you are not set up for on-line filing it may be better to contact a bookkeeper or accountant in your local area to do it for you. A client of mine was recently advised that it could take up to 3 weeks for them to be set up for online filing, which would take you well past deadline day.
