SELF EMPLOYMENT
You can be self employed as an individual, sole trader or continue to provide services through a personal limited company. Contractors and Locum Professionals who own a company are termed to be self employed by HMRC. All the profits remain with the company and are not subject to self assessment tax unless money is withdrawn as salary or dividends.
In order to become a sole trader as an individual, you must get registered with HMRC and submit personal tax returns on an annual basis. As experienced tax accountants, we can help you with sole trader registration process and can file your self assessment tax returns each year, ensuring that you stay on top of your business and tax compliance.
What Do You Need To Consider If You Are Self-Employed?
- If you are self-employed you will be liable personally for any debts run up by your business. Therefore, if your business requires considerable investment this can make being self-employed a risky venture.
- If you are self-employed you will be obliged to complete and submit a Self Assessment tax return. This can be a complex procedure, however if you choose The Accountancy Solutions we can complete your return on your behalf and file it online to HMRC.
- If you are self-employed you will usually have to pay the amount of income tax that you owe over the course of the tax year in 2 installments – one in January and one in July, and then you will usually also pay a balancing payment by 31st January each year.
Advice For Self Employed
Anyone who is self-employed is obliged to comply with some regulations. If you plan to become a sole trader or start a business, you must register with HMRC within a month. If you are working as contractor or providing services under limited company you will be register for self assessment as director of the company. Areas we can assist in include, but aren’t limited to:
- Register with HMRC for Tax and NI within 3 months
- Set up a business account whenever possible
- File an annual self-assessment tax return
- Pay tax on any profits
- Pay Class 4 NI contributions on profits
- Register for VAT if necessary
- Set up a PAYE system for any employees
Advantages of Being Self Employed
- If you become self employed, you will have more flexibility and control on your work and you can also attend other activities and commitments like child care etc.
- You can work on different projects at the same time and can take up jobs from different clients.
- You are open to ideas to grow business and fuel your thoughts with Entrepreneurial side to build your business.
- You can claim tax relief on expenses and can save more money. You can also claim cost of any equipment you have bought for business.
- You can also work from home and this is one of the freedom which self employed persons like the most. Its freedom of choice of the place of work.
Dis advantages of Being Self Employed
It’s important to consider the disadvantages of being self-employed too, in particular the risks and costs that come with self-employment, for example:
- You may struggle to start and acquire right clients in the market.
- There may be some start up expenses which you would need to get started.
- You will not be guaranteed any income, other than if you have a solid contract in hand. You will find it challenging to balance your cash flow.
- You will be sole responsible for the work you do, your success and your failures
- You will be dealing with admin side of business which involves book keeping etc.