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When you register as self-employed with HMRC you’ll have to choose which type of accounting you prefer: cash basis or traditional.
Cash basis is the one suitable for 95% of self-employed people, but let’s have a quick look at the differences.
Here you record your income and expenses regardless if you have actually been paid or not. Basically, use your invoices instead of bank statements.
The advantages are that you can offset losses and it’s also easier to deal with VAT.
This is much simpler: just record your income or expenses when you actually receive or pay money in your bank.
This is a way of calculating some of your business expenses using flat rates. You can choose this only if you also use cash basis.
You can use flat rates for:
For everything else, just work them out as you would normally.
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