Ready to take the plunge and become self-employed? You have done all the research, decided on what you are going to do, but now what? To help you understand some of the most important issues, here are 5 things you need to know when venturing out on your own.
Register with HMRC as self-employed
The UK tax year runs from 6th April to the 5th April the following year. Becoming self-employed during a year means that you will have to complete a tax return for that year. You must tell HMRC that you have become self-employed and need to complete a tax return within a reasonable time and definitely no later than six months after the end of the tax year in which your self-employment started.
Note that your self-employment doesn’t necessarily start when you begin to receive income. It can start earlier, when you begin to incur costs. This is a distinction which is often misunderstood.
For income tax returns, you will be responsible for calculating how much tax you need to pay. The system is known as self-assessment – because you have to self-assess!
At Central Business Services we have a very professional team that will do all of this for you, so it will free your time helping you to concentrate on your new business. If you are unsure on how to register your self-employment status with HMRC, then our team will be able to help you and take you through the process. Ring us on (01509) 816150 for a free consultation.
Will you need to register for VAT?
If your business has an annual turnover of £85,000 or more then you will have to register for VAT including the Making Tax Digital scheme. This is something we can go through with you and lift the fog around VAT.
In some circumstances it may be beneficial to voluntarily register for VAT. We can advise you on this as well as on the various VAT schemes and their operation – Cash VAT, Flat Rate Scheme, Annual Accounting for VAT etc.
Opening a business bank account
It is always a good idea to keep your business records separate from your personal affairs. Small business current accounts fees don’t break the bank. It will also look more professional to have your business name on cheques and bank details on your invoices. It is worthwhile shopping around and seeing which account will be best for you.
Make sure you are insured
By law you are required to have certain insurance policies in place, there are no exceptions. The type of business you have will determine the insurance cover you will need to take out. Most small businesses will take out public liability insurance, especially if customers visit you on your premises or if you carry out work on their property. It will protect you if a third person injures themselves, or damage is caused to a property because of your business activities. If you employ another person, even if it is only part-time, by law you are required to take out employer’s liability insurance. This will need to cover at least £5 million and you must display your certificate of insurance where the employees can clearly read it.
Any vehicle used for your business must be properly insured for business purposes.
Keeping financial records accurate and up to date
This one is crucial for your business. You must keep on top of your paperwork and records, not only for the tax authorities but for the operation of your business. Many small businesses use online cloud-based accounting software. This will enable you to access or input data anywhere as well as your accountant. We offer Quickbooks Online, Xero, Sage Business Cloud and Kashflow. We will help you to decide which accounting software works for you based on your business needs. Have a look on our website to see what we can offer.
Our relationship with various cloud accounting software providers means that we can usually supply cloud software at a much lower price than a direct subscription. Because we provide most of the support, we can offer Quickbooks Online at around 50% of the cost of dealing directly with Quickbooks.
You could read some of the articles on our website. You will find them informative.
Come along for a Free, no obligation, chat about your plans and hopes. You may find our experience and expertise valuable in helping you get it right from the beginning. We are based in Sileby, near Loughborough and pretty close to Leicester, Nottingham and Derby. If you can’t make it in person, we are happy to chat on the phone.
Another blog you may find of interest… Growing your business