Whether you are recently unemployed, redundant or just fancy being your own boss, there are many factors to consider when it comes to becoming self-employed. You may even be unsure whether this is the right avenue for you to go down at this point, so it will help you to know exactly what is involved before taking that all important step.
First of all you need to register as self-employed with HMRC within three months of the date you started trading. To do this you must establish which way you would like to trade, for example, as a sole trader, a partnership or a limited company. If you are working alone and want to keep things simple then registering as a sole trader is usually the best way to go.
A partnership is similar to this, except there are two people running the business. Registering as a limited company can be a bit trickier but it will give the business a completely separate identity from the people who are running it, as the company will be legally separate from its shareholders or directors.
Now you need to assure that your book-keeping and accounting is being dealt with correctly, especially if you are trading as a limited company. By keeping on top of business transactions, you will be able to fill in your tax returns with ease. Accountancy specialists like ClearSkyAccounting.co.uk Contract Accountants will help you to keep all of this in order.
With the help of your accountant you will be responsible for paying income tax on whatever you earn. This means you must fill in a self-assessment tax return, not forgetting to pay any tax you may owe. If you do this on paper you must make sure that HMRC receive it by 31 October. However if you complete it online then you will have an extra 3 months to do so as the deadline is 31 January the following year. You will also be responsible for making national insurance contributions for yourself and any employees.
If your turnover in any 12 month period is over or equal to a certain limit, then you will need to register for VAT. In fact you might just choose to do it anyway, as having a VAT number can make your business more credible, and it avoids any fines if you were to unexpectedly hit the threshold.
It is also useful to consider other aspects of your business aside from the paperwork and official stuff. For example, how you prefer to work, on a more personal level. So if the idea of being your own boss appeals to you and you are happy to take on the responsibility of finding all your work and contracts by yourself then this is the ideal set up for you, especially if you need to get set up quickly and cheaply. If this doesn’t sound like you, then you may want to assess your options, as becoming self-employed may not be the right move. Click here if you would like any more information on the pros and cons of becoming self-employed.