Being Self Employed
So you’re thinking about becoming self-employed? Well, first things first you need to contact HMRC. You should tell them that you want to register as self-employed and also the date you started your business. You then need to start paying Class 2 National Insurance. This is a fixed weekly sum. The two ways of paying this are monthly or half yearly. However, if your total income is less than a certain amount each year, you are able to get an exemption from paying class 2 National Insurance, although it can be a good thing as it does help contribute to your basic pension. Once registered you will get your unique tax reference. It is a 10 digit number that is only issued to those who are self-employed.
If you are self-employed, you will have to fill out a self-assessment tax return each year. In April or May, HMRC will send through a letter asking you to complete one of these. This is just so HMRC have information about your profits from your business and any other income you may receive that you should be taxed on. It allows them to work out how much national insurance you should pay. The more detailed the information and the more accurate the records you keep the easier and quicker it will be for HMRC to process, and also for you to answer any questions HMRC may have for you. At Abacus, we can help fill out your tax return for you, to make sure you have everything covered and you don’t have any nasty surprises.
Also, if you are self-employed you need to make sure you separate business and personal expenditure - having another bank account could really help you here. Furthermore, you need to make sure you keep every piece of paper that is business related! Look at keeping all sales invoices that you send out, all expense receipts, a spreadsheet of the amount of business miles consumed, (by car, motorbike or bicycle). Also, all bank statements, paying in books, cheque stubs and credit or debit statements are also important to keep hold of, as well as any letters you receive from HMRC. Organisation is key. Although looking at possibly having an accountant can help you with this as well. Here at Abacus, we have a great online book keeping system that can really help to organise you and your business. Talk to us about it today!