Wednesday 31st March, 2021
Recently joined the ranks of 5 million self-employed people in the UK? When you’re just starting out, it can be a challenge to stay on top of everything; after all, being your own boss is great but comes with more responsibilities and more paperwork.
To help you get your bearings, our friends at Gorilla Accounting have put together a few tips to help you navigate the complex – but exciting – world of self-employment.
Starting a business will take up a lot of your time, but don’t get swept away by it all without notifying HMRC of your new venture. As a self-employed individual, you’ll have to pay taxes through a self-assessment tax return and pay Class 2 and 4 National Insurance contributions. You have until 5th October of your business' second tax year to let HMRC know.
Limited company owners must register with the UK’s registrar of companies. Companies House will list your business publicly, so everyone can see details like your Registered office address. You must send them annual returns and tell them about changes to your accounts.
Protect your brand-new business by getting the right insurance. Some policies are mandatory in the UK, such as employers’ liability cover - essential if you employ staff. Others, like income protection insurance or buildings’ insurance, are optional. Still, they can protect your livelihood, so make sure you don’t skip this step.
As a self-employed person, you must record all transactions, sales, and expenses. You’ll likely use accounting software (especially when you consider Making Tax Digital and the government’s rules to keep digital records), so shop around for the best option for your business. Records have to be kept for a minimum of 5 years after the 31st January deadline for the relevant tax year.
It can be tough to stay up to date with tax rules and regulations, as the government changes them regularly. Still, you should be aware of important tax figures, such as the following:
As a limited company director, some of your contracts may be caught inside IR35. You must understand what this means and keep up with any changes to the legislation. If you’re inside it, you must pay the right amount of tax and National Insurance.
When you become self-employed, you’re responsible for paying your own taxes and National Insurance contributions. By putting a certain amount aside every month, you won’t struggle to find money to pay HMRC what you owe when tax season arrives.
Want to minimise the amount you lose to tax? Check out these 3 little known tips for staying tax efficient.
A dedicated accountant can handle all your admin, give you peace of mind and take care of tasks like submitting self-assessment returns and preparing Companies House Confirmation Statements.
Gorilla Accounting are a technology-driven accountancy firm for sole traders, locums, and limited company owners. They’ve helped countless self-employed people manage their accounts and offer a straightforward solution tailored to your business. Gorilla have an exclusive offer for any Penfold customers, offering the first month accountancy service free! Speak to their friendly team today to find out more.
Being self-employed is a rewarding but challenging journey. Whenever you’re feeling a little overwhelmed, it’s important to remember you decided to go out on your own for a reason. Take a break, pour yourself a nice hot drink and kick back by listening to some of the fantastic self-employed podcasts available!