Top 5 tax tips for the self-employed
When going self-employed, there are so many benefits: setting your own hours, choosing the work you want to do, and earning as much as you can. Despite this, one of the tough responsibilities is to understand how paying tax will work, which can be tricky for new startup businesses. An accountant may be the best person to manage your taxes so that you are free from the stresses of the job and give you any advice that may be beneficial to you.
Here are five top tax tips for the self-employed.
1. Record your business expenses
Make sure you record your business expenses by keeping receipts and noting down any outgoings in a log book. You can get an accountant to do the bookkeeping if you are unsure. You may be able to claim a tax return on these expenses which is the reason behind keeping track of it all.
2. Record your earnings
Be sure to keep records of any earnings for up to 6 years later. HMRC could demand to see your records at any point, so make sure you are always prepared to avoid being caught out.
3. Don't take risks
If you fail to declare any income that you have earned in the tax year, you may be liable to pay double the tax rate. This is due to HMRC’s new penalty. Don’t be sneaky and hope you can get away with the odd pound here and there - it simply isn’t worth the risk.
4. Make sure you know what you owe
Make sure you are not overpaying on taxes. As a self-employed worker, you are entitled to pay less National Insurance than those in employment. Check that you aren't paying more than you should.
5. Do plan for the future
It may be worthwhile to set up a retirement plan. The money that is spent on a private pension plan early on will be taxed initially, but can be claimed back and added directly to your retirement fund, which will benefit your future.
If you would like any further information or guidance on self-employed taxes and the ways in which an accountant can help you, do get in touch with our Business Services Partner Robert:
Tel: 01825 745935
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