new business starter

ignomony_46

Hi there.

Wondering if someone could answer a few questions for me ? It would be greatly appreciated.

Basically I am in the process of starting a carwash business. I am hoping to have my staff working on a self employed basis due to the nature of the business i.e we would have quiet days due to bad weather so the workers would be earning a cut of the work that comes in. First of all can I have my staff on a self employed basis & would I have to register them as self employed or would the staff themselves be responsible for registering as self employed ? Also does a tax bill get paid at the end of each tax year (april) as a one off payment ? What is the threshold for v.a.t registration. Can you advise me of the basic rate tax for a self employed business owner ? I am on the undertsanding that deductions such as petrol costs and rent etc are deducted from reveneue before the tax is calculated. I.E whatever is left over after expenses is the amount you pay tax on ? I have been told I will also have to pay business rates. Can this be paid on amonthly basis ?

whatatwit

Hi.
There are strict guidelines about whether or not a person is classed as employed or self employed.
Usually if you are dictating the hours of work, then they are employed, but do have a google and check it out further.

There are allowable expenses; rent, rates, water, electric, insurance etc.
You would have to personally register as self employed and complete a Self Assessment tax return each year.
Self employed tax is payable in 2 instalments, January and July.
The rates of tax are the same for the self employed as employed people, but self employed have to pay Class 2 National insurance and a % of profits as Class 4 National Insurance.

Business rates can be paid monthly.
You would have to google the VAT threshold.

Good luck.

ignomony_46

Thanks so much. I will have a look on google. You have been very helpful

PlutoinCapricorn

People are definitely responsible for registering as self employed themselves, you cannot do it for them.

Being self employed means that they are responsible for paying their own income tax and National Insurance contributions. If you took on employees or casual workers you would need to pay employer's NI and deduct the NI and income tax from these people's wages. You would need to follow all the employment laws and think about paid holidays, sick pay, contracts of employment etc. Getting people in on a self-employed basis makes things much simpler for you, but they need to be aware of what they are gaining and losing and whether they can really be considered to be self employed, and so do you. If they do the work in their spare time on top of having a job where they pay Class 1 NI, then their contribution record will not suffer.

HMRC will get suspicious if they see regular payments for similar amounts to the same people, so the work really does need to be irregular.

The VAT threshold for registration is £67,000 for now, but it goes up from time to time.

PlutoinCapricorn

The income tax you pay depends on whether you have registered as a sole trader or have set up a limited company.

If you are a sole trader, the most important point to bear in mind is that you will be taxed on your profit not your income. You will pay income tax at 20% on everything over £6,475 unless your profit is over £43,875. You will need to pay Class 2 NI at £2.40 per week unless you earn under £5k approx.

Rates, percentages and bands are everywhere: HMRC, Citizens Advice ..
they change every tax year unfortunately.

fengirl_2

Take advice on the employment status if your workers - you cannot just decide they are self employed in case business is slow. If it is decided that they are employees, you need to take into account National Minimum Wage, NIC, holiday, sick pay, etc, not to mention employment contracts.

PlutoinCapricorn

There is also the question of insurance: definitely Public Liability and probably something to cover the people who work for you.

People on MSE recommend www.businesslink.gov.uk for useful advice for people who are considering starting a business.