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.

What abolishing the  tax return means for your business

Digital tax accounts taxpayer easy guide 2015

It is nothing new for taxpayers or their agents who already use HMRC’s services to manage their tax affairs online. In fact, over 85 per cent of Self Assessment tax returns are already completed this way.

Digital tax returns to replace tax returns announced in 2015 Budget

The Government has announced their plans to update the tax system, by replacing traditional tax returns with digital tax accounts for millions of UK individuals and businesses.

From early 2016, around five million SMEs and ten million individuals will have access to their own digital tax account and by the end of the next Parliament, every individual and SME in the country will have one. But what does this mean  to you and your business?

At the moment, there is still some uncertainty as to the finer details and many sole traders and small businesses are concerned about the changes and how it will affect them.

Later this year, the government intends to publish its roadmap and further consult on the changes; some of these changes will require investment in new systems and changes to legislation.

What abolishing the  tax return means for your business

Digital tax accounts taxpayer easy guide 2015

• Businesses and individuals will be able to view and manage their tax information online
• Taxpayers will be able to see how their tax is calculated
• There will be options for paying securely online
• Taxpayers will be able to check how much tax they owe or need to be repaid online
• Businesses with more than one tax affair - like corporation tax, VAT and Pay-As-You-Earn (PAYE) - will be able to view their total liabilities across the board
• HMRC will already hold information on file along with third party data
• Those who pay tax through PAYE will have their National Insurance contributions, income tax, and pension position shown in their digital tax accounts, including any interest from banks and building societies

Although it is not exactly clear yet as to the timing or the implications, we will keep you informed with all of the latest news and developments. Losing the paper does not mean that you will no longer need an accountant – looking ahead and adapting your business to deal with any changes will be the key to making the transition smoothly. 

HMRC will be in receipt of real time data and information, it is going to be vital to ensure that all information entered is clear, correct and validated prior to updating your digital account.

In the meantime, if you would like to contact us please click here, or request a free of charge call back from our website. We are also available for online chat via @OmnitasTax or you can join in the conversation on Facebook.