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Being self-employed means that you work for yourself rather than an employer.
We know that the accounting side of being self-employed isn’t always straight forward, which is why we’re breaking it down for you!
You can thank us later. 😜
Here’s some simple steps of what you’ll need to do when self-employed:
First, you’ll want to register as a sole trader. You may be wondering, ‘how do I do this?’
Luckily for you, we’ve written a step-by-step guide to registering as self-employed. Check this out here.
But that’s not all, we’ve also answered all the most common questions related to setting up as a sole trader – you can check this out here if needed.
FYI: If you decide you no longer want to work for yourself, you’ll need to let HMRC know so that they aren’t expecting you to file a tax return.
Choose whichever method works for your business. Cash basis is generally the easiest option as you simply track what goes in and out of your bank account.
Traditional accounting may work for bigger businesses.
At first, it may be inevitable, but it’s probably good to get into the habit of separating your personal and business finances as soon as possible.
This will help you keep better track of your business income and expenditure.
You don’t need to show documents when you file your tax return, but HMRC will ask for them if they ever audit you. For this reason, you should keep all documents and receipts organised.
Keep records for at least 5 years.
Not everyone is required to register for VAT, but you’ll have to register if:
For example: the current tax year is April 6th 2022 to April 5th 2023, so you have until January 31st 2024 to submit your online tax return.
We’ve got all the tax year dates you need to know here.
🚨 Don’t forget to claim:
Payment on Account means you pay your annual tax bill in two instalments. You may have to pay up to 150% the first time, but you can read more about Payments on Account here.
To make it a bit more digestible, here’s a visual:
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