Self-employment tips – part one

One of the main benefits of becoming self-employed is the ease with which you can start up and run your new business.

In part one of our special feature, we take a look at some of the important things that you may wish to consider before taking the plunge.

You can even become a sole trader (another term for self-employed) whilst working as an employee for someone else, so you can test the water and see if you’re suited to working for yourself.

Here are first top tips for when you decide to go self-employed:

How to register as self-employed with HMRC

Once you set up as a sole trader (or work as a partner in a partnership if there’s more than one of you), you will be responsible for paying your own income tax and National Insurance (NICs).

You must register as self-employed with HMRC within three months of starting trading, even if you already pay tax via the self-assessment process each year. You can register online or call HMRC on 0845 915 4515 if you’d prefer to speak to someone.

If you are unsure whether or not you need to register with HMRC, here is some help to establish whether you are employed or self-employed.

Once you start operating as self-employed, you will need to pay your own National Insurance contributions (NICs).

Do you need to register for VAT?

As of April 2015, if your business has an annual turnover of £82,000 or more, you must register for VAT.

At any stage of the business cycle, if you look like you’re going to hit this annual VAT threshold over the coming 12 months, you must also register. The threshold usually rises by a few thousand each year. Make sure you let HMRC know within 30 days, or risk paying a fine.

In many cases, you might decide to register for VAT even if you don’t need to. You may gain more credibility by having a VAT number, and you’ll be able to claim the VAT back on eligible purchases you make.

You might also consider the flat rate VAT scheme, which makes accounting for VAT much simpler. Your accountant will be able to advise you if you’d be better off on the Flat Rate or standard VAT scheme.

Need advice?

If you need advice about becoming self-employed, we are here to help – request a free of charge call back from our website or click here and we will contact you to discuss your situation.

10 ways to get the best value from your accountant

An accountant can sort out your tax return or your annual accounts and provide advice on a range of issues, but how do you get the best return on the fees you pay to an accountant? 

1.   Choose carefully

Look for accountants with experience of your type of business. Anyone can set up as 'an accountant', so look for chartered or certified accountants, whose qualified status is backed by membership of professional bodies. A large firm suggests reliability, but a smaller one may respond better to your needs. Ask prospective accountants how they can help your business.

2.   Explain your expectations

Your accountant will summarise terms and conditions in a letter of engagement. Put your expectations in writing, too. Describe the level of service you require, for example, how quickly you need queries to be answered. Ask to deal with a specific contact, to help build a close professional relationship.

3.   Ask questions

Check what other services your accountant can offer. These could include guidance on setting up your business, preparation of financial forecasts, help with loan applications, audits, investment advice and other suggestions for minimising your tax liability.

4.   Use your accountants’ contacts

Accountants specialising in your type of business can often suggest good trade contacts. Perhaps your accountant knows a supplier who can offer you a great deal or maybe they know of a potential investor.

5.   Keep talking

Communicate regularly with your accountant to get the best possible value from the relationship. Schedule quarterly meetings to review your firm’s performance; this will help you plan better for the future. Be sure to meet before producing your end-of-year accounts or tax return.

6.   Keep user-friendly records

If necessary, ask your accountant for advice about how best to maintain your financial records. If your books are easier to read, you will save them time, which should mean a lower bill. 

7.   Do the easy jobs yourself

To reduce your outgoings, take care of simple bookkeeping tasks yourself, possibly by using accounting software. You could then better focus your accountants’ efforts where they best serve your business.

8.   Delegate

If your time would be better spent concentrating on sales or product development, you could ask an accountant to take greater responsibility for your bookkeeping and payroll. This would free you up to make more profitable use of your time.

9.   Shop around

Armed with recommendations of good accountants, get a full breakdown of an accountant's charges and services. Work out which one offers you best value for money (and that's not necessarily the cheapest, of course). And, at least once a year, review the value for money you receive. If you believe you can get better advice and value elsewhere, go elsewhere.

10.   Seek advice

An experienced accountant can offer sound advice in a number of areas. For example, they could help with your business plan, help you estimate the cost of new projects or advise on the levels of investment needed to achieve your business development goals.

We understand that all clients are individual and as such have different needs – our cost effective but personal approach gets results and ensures that customers always get the best out of their accountant if they choose Omni.

For more information, call 01902 837 408 today, request a call-back or contact us.

Self assessment tax return help

The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have more complicated income tax affairs. Both self-employed business owners and company directors must complete self-assessment tax returns.

The right approach to your self-assessment tax return will minimise aggravation and can reduce the amount of income tax that you end up paying.

Our guidance will help you understand the key issues that need to be dealt with. For help with the specifics, talk to an accountant: professional expertise should save you time and money.

Registering for self-assessment

Who needs to complete a self-assessment tax return?

·         Recently self-employed

·         Have become a partner in a partnership

·         Are a company director

·         Have untaxed income (perhaps from rental property or complicated income tax affairs)

·         Have an income of £100,000 or more

·         Need to pay capital gains tax or have expenses to claim

There are a number of circumstances under which you may be required to complete a self-assessment tax return.

You can find out if you need to complete a self-assessment tax return on the HM Revenue & Customs (HMRC) website, or by giving Omni a quick call on 01902 837408.

Before you can complete your first self-assessment income tax return, you will need to register with an accountant or with HMRC. You should register as soon as your circumstances change but certainly no later than 5 October after the end of the tax year for which you need to submit a form.