newly se... going seeing an accountant soon but no idea!

brians_daughter

Ok, due to me being unable to travel for work with a disability I have decided to go SE and do freelance work for companies at home ie sales, data analysis etc. I only expect to earn a modest income from this ie I iwll only be charging my time at a nominal fee initialy whilst clients build up trust in me and i can get some companies on file for referances etc.

I have already got 3 small projects to start work on.

I am also going to be a ft mature student next month. My income from the work i will be doing will probably be around £150 per week, or £7800 PA

I am going to see an accountant next week, but i am just really looking for hints, tips, advice whatever really as how to best conduct my affairs. or any reading you may all suggest.. i am obviously going to read as many posts on here as i can as well

I am a complete novice at this and really do not know where to start.....except for registering as SE with HMRC

TIA

MrCarrot

Hi Brian

Well done for taking the leap in becoming self-employed. If you do a good job and there is a requirement for your type of work, you can expect your income to grow over time as you pick up more and more projects.

Your initial income is quite low and therefore won't be subject to a lot of tax. It's pretty much the same as when I started in self-employment.

If you are a sole trader (as opposed to a limited company) and have a low income, I would be wary of how much you pay an accountant. Good accountants are worth their weight in gold if you have complicated tax affairs (for example you're a limited company) or if you earn a lot and are looking at tax avoidance schemes. But a good £6000 of your income is going to be tax free.

Personally I would setup a different bank account for your business. This is not a requirement for self-employed people, but it will make things simpler in the long run. Claim for everything you can ([FONT=&quot]legitimately[/FONT]) and keeps records of everything (sales and purchases). If you claim for business mileage, keep a mileage log.

As well as keeping all your sales invoices and receipts, you could also log them in an Excel sheet. At the end of the year it should be a fairly simple case of calculating the amount of tax that you owe. In its simplest form it will be:

Amount earned - Business expenses - Personal allowance = Amount of money to be taxed

The calculation to work out the amount of tax and national insurance on the "Amount of money to be taxed" figure above will be quite straightforward. The HMRC forms may explain this, or you could go into the tax office and get advice.

There are a few other complications - claiming tax back on all purchases (such as IT equipment) is sometimes done over several years as the equipment depreciates. Again call the HMRC helpline if you're unsure.