One of the main benefits of becoming self-employed is the ease with which you can start up and run your new business.
In part one of our special feature, we take a look at some of the important things that you may wish to consider before taking the plunge.
You can even become a sole trader (another term for self-employed) whilst working as an employee for someone else, so you can test the water and see if you’re suited to working for yourself.
Here are first top tips for when you decide to go self-employed:
How to register as self-employed with HMRC
Once you set up as a sole trader (or work as a partner in a partnership if there’s more than one of you), you will be responsible for paying your own income tax and National Insurance (NICs).
You must register as self-employed with HMRC within three months of starting trading, even if you already pay tax via the self-assessment process each year. You can register online or call HMRC on 0845 915 4515 if you’d prefer to speak to someone.
If you are unsure whether or not you need to register with HMRC, here is some help to establish whether you are employed or self-employed.
Once you start operating as self-employed, you will need to pay your own National Insurance contributions (NICs).
Do you need to register for VAT?
As of April 2015, if your business has an annual turnover of £82,000 or more, you must register for VAT.
At any stage of the business cycle, if you look like you’re going to hit this annual VAT threshold over the coming 12 months, you must also register. The threshold usually rises by a few thousand each year. Make sure you let HMRC know within 30 days, or risk paying a fine.
In many cases, you might decide to register for VAT even if you don’t need to. You may gain more credibility by having a VAT number, and you’ll be able to claim the VAT back on eligible purchases you make.
You might also consider the flat rate VAT scheme, which makes accounting for VAT much simpler. Your accountant will be able to advise you if you’d be better off on the Flat Rate or standard VAT scheme.
We hope that you have enjoyed our Self-employment tips – part one.
If you need advice about becoming self-employed, we are here to help – request a free of charge call back from our website or click here and we will contact you to discuss your situation.