Setting up as a sole trader
When you decide to set up on your own; whether as a freelancer or a one-man band business, you need to be aware of your tax responsibilities.
Not only that but you also need to know what you can and can't claim for, and how to keep your evidence.
This can seem like a scary step, particularly if you're going freelance to fulfil a passion, however it doesn't have to be. There's some basics you need to know to make sure you keep on the right side of HMRC, but after that you should be good to go.
Keep a record of everything
From the get go you need to keep a record of your income and expenditure so that you can easily produce a tax return. Every sole trader needs to produce an annual self assessment tax return by 31st January for the previous tax year.
So for example, for the tax year 18-19, the deadline for submitting your tax return will be 31st January 2020.
You can use a simple excel spreadsheet for this, keeping income on one sheet and expenditure for another. Be sure to keep all your receipts for five years after the submission deadline for that year, in case you're audited.
Don't miss the tax return deadline
If you don't pay your tax return on time you'll get a penalty of £100. This will increase after three months, so make sure you get it in on time. If you keep records as you go along, you shouldn't find this too difficult.
Get help if you need it
If you're really bad with tax, it may pay to get an accountant; particularly if you expect to receive a good profit. They can make sure you know what your deductions are, and ensure you pay the right tax and national insurance contributions.
That frees you up to do what you love, as well as making sure you fulfill your responsibilities.
Set aside your tax and NI in advance
Use an online tax calculator to estimate what you're likely to owe on projected income and set that extra amount aside each month. That way you won't be hit with a big tax bill at the end of the year.
To discuss setting up as a Sole Trader in Sussex get in touch with our Business Services Partner Robert who can discuss the best path with you:
Tel: 01825 763366
What is your company’s tax strategy for 2019/20?
Does your business have a tax plan or strategy for the coming year? Are you sure that you’re claiming everything available to you and that your business is structured in the most tax efficient way possible? This article will discuss the strategies that you might be able to use to implement the most tax efficient decisions for your business.
Making the most of all of your tax allowances (PODCAST)
Ensuring you are making the most of all of your tax allowances within a fiendishly complex overall tax system is always a challenge. Hence why in our latest podcast, we are talking with Robin Stevenson (Head of Private Clients at Swindells Accounting) about how to make sure you’re maximising all of your available tax allowances in the run up to the end of the 2018/2019 Tax Year.
Self assessment tax returns, what you need to know
We are fast approaching the self assessment tax return deadline. If you are self employed or in receipt of other income or gains, you will need to file a return and pay over your tax liability. This article will discuss who needs to complete and file a self assessment tax return
Sign up to receive our private content
straight to your inbox