Accountant companies like McManus Williams help dozens of people start their own businesses every year. Below we will discuss the five things you must do in the UK when you go self-employed and why professional help can avoid fines and confusion.
You can become a sole trader whilst you are still working for someone else as an employee. This allows you to decide whether you are really suited to working as self-employed or not. The sooner you register yourself as self-employed, the better. This is done with the HMRC and accountant companies like ours can help you if you are unsure what you need to do.
If you are working as a sole trader you need to register as such. If you will be entering into a partnership then you will need to register as such. You will become responsible for paying your own National Insurance Contributions as well as your own wages. You have up until the 5th of October of the second year of your business to complete registration. We however recommend that you proceed in the first months after setting up, once you are sure you will continue with your venture. You must also bear in mind that the tax year runs from 6th April to the 5th April of the following year. This means that if you start trading in January of 2018, you will only have until 5th October to complete the registration. This is because the tax year and the calendar year are different. It can be confusing. So, contact us and let us help you with the process.
Accountant Companies : Registration and Self-Assessment
Once you have taken the step to register as self-employed you will need to complete a self-assessment tax return each year. You will also need to pay your own NICs. If you are not sure how much you should be paying, take the advice of your local Portishead accountant. A sole trader generally pays class 2 contributions, and these work out at 2 pounds and 85 pence per week. If your profit in the tax year is less than 6,025 pounds, then you do not need to make these contributions. It must be noted here that Class 2 contributions will be abolished in April 2018.
You will also be required to pay Class 4 NICs. These are 9% on your annual profits if you make between 8,164 and 45,000 pounds. On profits above 45,000 pounds, 2% is payable. If your business has an annual turnover of more than 85,000 pounds then you will also need to register for VAT. Failure to do so runs the risk of being heavily fined. Registering for the flat rate VAT scheme could be a safer and easier way to manage this side of your business.
A business bank accountant is vital. Keeping your personal and business money separate is a must. As a sole trader who is new to business, many banks will offer free banking as an introductory offer for a year or up to 2 years.
Insuring your business should be next on your list. The cover you need will depend on the type of your operations. If you are going to employ anyone, albeit part time, you will be required to take out employers’ liability insurance. Lastly, always make sure to keep up to date and accurate financial records of your business. This is something local accountant companies can help you with for a small monthly fee.