Tax must-dos for when you become self-employed
Becoming self-employed is no easy decision, but if you have, take a deep breath. Things are about to get very exciting for you. There may be quite a few challenges ahead but if you’re prepared, you will be ready to take them head on.
One of the most important things to consider is how you are going to balance your finances; specifically, how you will ensure that you are paying your taxes. The last thing you want in your first couple years of business is someone from the HMRC knocking on your door.
To prepare you for the future, here’s the most important things you need to consider when becoming self-employed.
You need to register with HMRC
You can do this through this link: https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed and this needs to be done by 5th October in your second tax year of business (tax years runs from the 6th of April to 5th April the following year). Once this is done, you will be responsible for paying your own national insurance contributions and you will need to fill in an annual tax return to provide the HMRC with information about your earnings.
You may need to be VAT registered
If your company earns, or is expected to earn, more than £85,000 at any point you need to register for VAT. If you don’t, you are at risk of being fined by HMRC. However, don’t worry about being VAT registered - this can actually be a massive benefit for your business.
You need to keep accurate financial records
The second you become self-employed, your business finances are all open for scrutiny by HMRC. It is your responsibility to make sure that you maintain accurate records of all expenditures, transactions and payments. You could face a hefty fine or even prison if you can’t provide the taxman with records when asked.
We know this all sounds daunting, and hopefully you aren’t too anxious from this information. If you do need support managing your taxes once self-employed, you can count on our accountants to help. Contact us today HERE for more information.
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