Sole traders and Personal Tax
Self Employed is the simplest way to start a business; it doesn’t involve any government registration fees. If you start working for yourself, you’re classed as a sole trader. This means you’re self-employed – even if you haven’t yet told HM Revenue and Customs (HMRC). The only drawback is that you are personally liable for any debts that your business runs up, these make risky options for businesses that require a lot of investment. You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings or over the weekend. If you are self-employed you would need to complete a Self-Assessment tax return, We can complete and file your return online or fill in a paper form. You would probably need to pay any Income tax you owe for a tax year in two instalments i.e. January and July plus a final ‘balancing payment’.
As a self employed, you will have to register within 3 months with HM Revenue & Customs. If you need any help with self employed registration, Please let us have information
Whether you need assistance with your self assessment tax return, require an accountant with experience working with sole traders and freelancers, or want independent financial advice to help get your business to the next level, we can help achieve your goals.
- Register as a self-employed with HM Revenue & Customs within 3 months of your setting up
- Pay Class 2 National Insurance contributions (£2.95/week for 2018/2019). This is collected on an yearly basis with your tax bill. HMRC may abolish this from 6th April 2019 on wards.
- File Self-Assessment tax return every year, The tax year in UK runs from 6th April to 5th April every year.
- Pay tax on yourself employment profits according to the tax band you fall in.
- Pay Class 4 National insurance contribution on profits above £8,424 (2018/2019)
- Register your Business for VAT in turnover is above the VAT threshold ( Currently £85K a year – 2018/2019)
- If you have employees, you should set up a PAYE system to collect income tax and National Insurance contributions.