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Are you thinking of working
for yourself?
Well done
You have already tackled the two hardest parts of starting out on
your own: getting an idea and making the decision to actually do it.
Now it’s time to think about the paperwork. That’s where we come in,
and we think you’ll be surprised at how simple it can be.
First things first
Get registered
Everyone starting out on their own needs to register with HM Revenue
& Customs. It’s quick, it’s painless and it can definitely save
you time and money. You must do this as soon as you start or within
the first three months, even if you already use a Self Assessment
tax return. There are penalties for not registering, so call TAX MATTERS
on 01463 71 11 12 to Register now - free of charge
Q&A
How do I pay my tax?
We fill in a Self Assessment tax return each year. There are sections
on income and expenses, plus you can claim allowances and reliefs.
We use this information to work out how much tax and National Insurance
you need to pay. You may then pay any tax due by cheque, cash or card.
What about VAT?
You don’t have to register for VAT until your taxable turnover reaches
£64,000, but there’s plenty of advice available when it does.
How does National Insurance work?
There are two types of National Insurance for self employed people
Class2, which is a fixed weekly amount, and Class 4, which is a percentage
of your taxable profits.
A few questions taken from The Inland Revenue Guide that you might
already be asking yourself.
What if I work in the construction industry?
To help contractors and subcontractors pay the right amount of tax
and National Insurance, the Inland Revenue have set up the Construction
Industry Scheme. Under the Scheme, all payments made from contractors
to subcontractors must take account of the subcontractor’s tax status
as determined by HM Revenue & Customs.
What records must I keep?
It’s all about making things easier for yourself. The law says you
must keep appropriate records also, you would find it difficult to
fill in your Self Assessment tax return without them. Bank statements,
receipts and cash transaction records are all vital for working out
your profits for the year and we use this information to calculate
your tax and National Insurance. There’s more about records in The
Guide but, for now, make sure you keep everything for at least five
years.
Do I get tax credits?
Self employed people can claim tax credits, depending on their income
level and circumstances. Plus, there are some additional tax reliefs
specifically designed for new businesses.
Relevant website
www.hmrc.gov.uk/taxcredits
Register now and get the ball rolling on your self-employed career
Contact Tax Matters today
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