Starting Self-Employment can be scary and can be difficult to know where start.
We understand that when you first start out, you need the support of an accountant and business advisor you can trust. Here are our easy steps to enter the world of Self-Employment fully prepared:
1. Get Registered
You will need to notify HMRC that you are starting to receive Self-Employed income. This is an online registration which will result in HMRC giving you a Unique Taxpayer Reference (UTR). You will need to keep this safe.
Once you have received your UTR it is also a good idea to create an online Government Gateway account which will give you access to your HMRC account online. This is useful for you to keep track of any outstanding payments.
2. Get Organised
The Self-Assessment deadline to file your return and pay the tax due is 31st January. For example, the tax year ended 5th April 2020 will be due by 31st January 2021.
You will need to keep records of your income and expenditure for a minimum of 7 years (current year and 6 previous). You can read our guide to allowable expenses here and bookkeeping tips here.
You will need to decide what kind of record-keeper you want to be (we work with all kinds, but I’m sure you can guess our favourite!):
- The ‘shove everything into an envelope/folder/shoebox to be dug out once a year (or quarter if VAT registered) to send to your accountant’ record-keeper
- The ‘organised, everything filed into monthly folders with supporting Excel summaries to track through the year’ record-keeper
- The ‘modern, using online software*, keeping electronic versions of receipts’ record-keeper
*We support all online bookkeeping software and can give clients access to our software partners for free
Another way you will need to be organised will be to set aside enough money to cover your taxes. We can help you with tax planning and making sure you understand the taxes payable.
3. Get a Business Bank Account
It is best practice for you to have a separate business account for all business transactions to run from. This helps you stay organised and differentiates the business money from your day to day account which will particularly help when saving for your taxes.
We have teamed up with our partners at Coconut to offer Equal Accountancy clients 3 months free business banking. Their application process is quick, easy, and completed via their user-friendly app with accounts open in minutes. Their app has useful tools to track your income and expenses which really does make it a great financial companion for self-employed people.
We are here to support you through your transition to the freelancing world. Self-Employment isn’t always the best option; you may want to consider operating through a Limited Company. You can read more about the differences here. Give us a call and we can ensure you are making the best choice for you. Find our Sole Trader packages here.
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Equal Accountancy Ltd offers Accountancy and Bookkeeping services in Hemel Hempstead and surrounding areas across Herts, Beds and Bucks. We offer a range of services for Limited Companies, Self-Employed individuals and Landlords including Year End Accounts, Corporation Tax returns, Self-Assessment Tax returns, Payroll services, VAT returns, Bookkeeping and Company Secretarial. Get in touch today for a free, non-obligatory quote for your business needs.