If you run your own business or are considering setting up one then we salute you. This is not for the faint hearted! Tax will be one of the first things you need to worry about and will continue to be a big preoccupation – have you seen how many people complain about their annual tax return due at the end of January?
• You need to register as self employed with HMRC (Her Royal Majesty’s Revenue and Customs) within 3 months of starting up or risk a £100 fine. This is all about paying the right amount of tax.
Your first step down the path of becoming a Sole Trader is letting the Tax man know. We can all do without an unexpected bill coming from them, especially when starting out. The best news about this is that you don’t have struggle alone with it.
Although it’s our job to grapple with this financial mumbo jumbo, we can speak fluent earthling! If we didn’t our families would have done us in a long time ago, so don’t worry we’ll do our level best to help you understand everything. If it feels like your tax return weighs heavily on you, be it your first one or something you dread every year, we’re here for a friendly chat and to give some advice.
• Your deadlines for paying tax will be 31st January and 31st July each year. In your first year you won’t pay any tax until the January AFTER the end of the tax year you started trading in. E.g. if you start in August 2014, tax year ends April 2015 and you won’t have to pay any tax until January 2016
• You will pay income tax, class 2 national insurance contributions (NICs) and possibly class 4 NICs class 4 depends on your income).
• You need to file a self assessment for tax each year; this is due by 31st January. For your tax return you need to keep detailed records of sales & expenses for your business.
Confused yet? Yep don’t worry you’re not the only one. But there is no need to panic, Rome may have (apparently) been built in a day but you don’t need to have everything sorted out in one, because lord knows the Roman’s plumbing left a lot to be desired.
Remember you can always talk to both/either your solicitor or bank manger for help. But if you are still unsure and worried about remembering all the necessary accounting and financial requirements you don’t have to do it alone. That’s why companies like Team 4 exist, to help you get through the paper minefield that is bureaucracy.
Any questions? We know tax and financial compliance can feel really scary so please just get in touch and ask us for some friendly advice:
Don’t miss out on our last article of this series: the financial needs for Ltd companies!