Accountants For Self employed
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We go one step further for our clients.
GM professional are Accountants for self employed individuals. If you would like to operate as a freelancer or are self-employed, then this is by far the quickest and easiest way to start a business.
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Why register as self employed?
The requirements to disclose are a lot less than a limited company as you are only required to complete a Self assessment tax return once a year. Also:
– You are in control of the business and are entitled to all the profits
– You are the business and not an officer which you would be under a limited company.
There are no restrictions of withdrawing funds from your bank account compared to if you were a limited company director then you would be withdrawing as a salary, dividend, bonuses or a loan account.
Before you set up as a sole trader or self employed
Anyone can set up as Self employed, although certain type of work will require you to obtain a permit or a licence from your local authority, such as Taxi Driving, Childminding or Street Trading. Setting up as a Sole Trader has some legal requirements you need to follow.
Planning to run your business from home? You may have to pay business rates for section of your home that you are using for business purposes. Depending whether or not you are using that part of the home for domestic purposes.
For example, if your work is online based and you work in your bedroom, it is very unlikely you will have to pay business rates because it is used for domestic purpose – but if you work in a separate room such as an office then you may have to pay business rates. You may need to bear in mind that you may need planning permission to work from home, depending on the type of business it is.
Any changes on your property for business reasons, such as a side extension for another access for your business or if your business will cause a disturbance in your neighbourhood; then planning permission may be necessary. You can receive more information on business rates and planning permission from the planning department in your local authority as every area is different.
Who registers as self employed?
Registering as self-employed does not require a lot of administration like a limited company. However, you must register as self-employed by 5th October of the business’s second tax year of when you have started your self-employment or when you have started to trade. You may receive a penalty of £100 if you have failed to register and can increase after three months.
Contractors/Freelancers and people who own a Sole Trader Business are classified as Self-Employed. Contractors can be people who work on a contract basis, for example Builders, Plumbers, Electricians (CIS Tax), Locum GP’s and etc. You will receive a Tax Free code, which for the new Tax Year of 2020/2021 will be 1250L. If your income is over £100,000 then your personal allowance will be reduced. The personal allowance for individuals born before 6th April 1938 is £11850 for 2018-2019 tax year.
Registering for Self-Assessment Tax Returns for Self employed
Self Assessment Tax Returns are required to be submitted to HMRC by Self-Employed or Sole Traders. This requires you to fill out a Tax Return form; paper based or online (both of which have different deadline dates).
You must inform HMRC of your Sales and expenses with a simple three line format if you are under the threshold of 85,000 in a short return. In certain circumstances you may need to fill in the full self assessment tax return if you fall under a certain category that requires a full discourse of expenses in each box and balance sheet entries. Please refer to the HMRC website to see if that applies to you.
HMRC will usually send your Self Assessment Tax Return in April, but if your Self Assessment does not arrive by the end of April then you need to contact the Tax Office immediately and let them know otherwise you will receive penalties. If you are doing your first Tax Return you will need to fill in a self-assessment registration form first. Your National Insurance number must be with you when you are filing this.
Self employed Registration
A CWF1 form will need to be completed to inform HMRC about your business, which will also register you for self-assessment. If you are not self-employed you will need to complete an SA1 form. Once you have done this, HMRC will set up Tax Records for you and your business and will send you a UTR number (Unique Taxpayer Reference). This number you should never lose.
If you need an accountant to register as self employed sub contractor and you would prefer to do this online, then GM professional accountants specialise in registering as self employed and helping you to obtain a UTR number. You will not need to fill out a register as self employed form or phone as we can take care of the whole process, find out out more from GM professional accountants about registering as self employed within 3 months.
How to Register as Self-Employed
Anyone who is looking to become self-employed or is self-employed must register to be charged income tax and national insurance contributions with HMRC. You can register by phone, post or online, whichever way suits you. However, the most convenient way to sign up is by the online application.
You will need to have your National Insurance number on you, as you will need to provide HMRC with your details when you are registering for national insurance contributions and income tax. If you do not know or have not got your National Insurance number, contact Jobcentre Plus ‘application’ line, which can be found on their website.
It is important that you inform HMRC the moment you have started working, as it is not possible to register in advance. The information you will need to provide while registering as Self-employed are:
• National Insurance Number
• Name
• Date of Birth
• Business telephone number
• Telephone Number
• Your Unique Tax Reference (UTR) – only if you were within self-assessment previously
• The nature of your business
• Start date of self-employment
• Address
• Business address
• The business’ UTR – if you’re joining an existing partnership
• Email Address
• If relevant, the full name and date of birth of any business partners
Once you have done all of this you will receive a letter from HMRC stating your unique tax reference number.
Self employed Self-Assessment Payment Deadlines
You must pay the amount you owe by 31st January the following year if you owe any money by the end of the Tax Year (April), the April before January. The deadline for payment is the same whether you have filed your Returns online or on paper. You will need to pay both or one of the following:
• The balancing payment (the balance of tax you owe for the previous year)
• The first of the two ‘payments on account’ (the advance payments for the current tax year)
You will receive a self-assessment statement that shows the amount due for your return. If you do not receive this before your payment date, then you will need to work out the tax due yourself or by your accountant by registering for self-assessment online and selecting the ‘view account’ option.
If you’re asked to make payments on account, your deadline for making your second payment is July 31.
Maintain books as self employed
In order to stay organised with your accounts, you should file them by Accounting Periods. This helps you stay compliant and organised when you reach the quarterly and yearly deadlines, which makes your books easy to follow and be read. Keep Bank Statements, Purchases, Sales and Business Related Expenses separate from each other. If you do not maintain your records, this will lead to confusion and penalties with the local authorities.
Accounts are very important to keep up to date with, as it is the foundation for your tax returns, accounts and your net worth. This also allows you to check whether your small business is doing well over the years and see if there is anything you could do to expand your business. A profit or loss for the year can be created to see how well your business is doing in your current year once your bookkeeping has been processed.
Self employed Filing
As a Sole Trader you will have to file tax returns annually. If you are VAT Registered businesses as self employed, your VAT returns must be done quarterly or Annually.
This means you will have to stay compliant and more importantly, organised at all times to help you make the year end process quick and efficient. When the new Digital Tax Scheme comes into place in the near future all Small Business and Self Employed Individuals will have to file and submit Tax Returns Quarterly, so it will be better if you organise your Accounts every quarter.
Staying organised when submitting a Tax Rebate is a must , depending on your legibility for Tax Refunds. You may have felt that you have been taxed unfairly so you can go over this with your Accountant. If you have still not received your p45 or p60 from your previous employers, contact your previous employers as soon as possible, especially if you are registering for Self-Employed.
They are likely to have these forms as it is a legal obligation for companies to keep financial and legal records for 6 years. Accountants may have a look at your p45 and p60 forms once you are looking to register as self-employed.
If you operate as a sole trader there are some legal formalities you will need to keep on top of. So to Register as Self Employed, contact GM Professional Accountants today for more information.
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