Self Employment - confused

Madaboutmoney_3

I hope someone can help me. I have been offered a job as a courier for a parcel company delivering catalouge items. I will be paid for each parcel I deliver. As I understand it I will have to register as self employed. Does anyone know about this line of work?

I have a 2 year old who will be going to nursery in October, so I am hoping I can fit most of it around that, maybe taking him along when I need to.

I have so many questions, but not sure where to start. I have just purchased an estate car, so that I can deliver these parcels, can I then class it as a company car, can I claim any expenses back, or tax allowances? What about Petrol expenses, insurance costs?

Should I open a separate bank account for pay and expenses to go into? The list goes on and on, but that is all I can think about at the moment.

Does anyone have any idea where I start. I have another couple of weeks before I start. Any advice would be greatly appreciated.

sarah_elton

The government have set up Business Link - a fantastic site for new businesses with loads of info:

http://www.businesslink.gov.uk

One thing - you have to tell the Inland Revenue you're self employed within three months (I think that's the timescale) of starting or there's an automatic £100 fine.

It's dead easy - you phone them up (number on HMRC website) and say you want to register as a sole trader. From then on you'll receive a tax return each April and quarterly National Insurance bills.

One tip - put aside the money for tax (if you're going to earn over your threshold) as it comes in, even though you don't have to pay it for ages under the return system.

I started doing freelance writing work last year so had to work all this out. Mine's only income so I don't bother with a separate account, although I do put my tax aside in a savings account ready for the bill. If you're going to have expenses it's probably simplest to have one account.

The main thing is to keep good records. Save all your receipts and invoices/payment notes. Have it all organised and filling in the return is dead easy.

As for what's claimable as a business expense, I'll leave that to some knowledgeable accountant types.

larmy16

I am registered self employed as a cleaner. I just keep a record of all earnings and outgoings (mainly petrol) - currently it is 40p per mile or so the tax man told me.

I do not keep a separate account as I need the money to live on - there is no profit as such.

I do transfer my tax to be paid to a separate account though. It is quite simple so don't be scared!

I just keep a receipt book and write down each client's money they have paid me. Some I am employed by but they pay me monthly - again it just goes down in my book keeping. I do my accounts weekly, but tot it up at the end of the month and it all just gets carried forward to next page. Generally I find 4 weeks fits on one page of the book I use. Keep all your petrol receipts.

I am lucky in that my mileage tends to be the same everytime. I worked out the distance using the AA route planner. Yours may be more complicated as you will be going to different places all the time. You should go to the tax office - they have quite helpful staff there!:)

Madaboutmoney_3

Thank you sarah_elton and larmy16, you have both made me feel so much better. I was getting worried about it as I didn't know where to start. Great link by the way. Do you both have an accountant, or do you do it all yourselves?

Any more info on this topic would much appreciated. Or examples as above would be useful.

Thanks again.

sarah_elton

I do it all myself. My tax return took about 20 minutes to fill in, and that was the first time I'd done one. And I have a full time PAYE job plus self-employed so had to fill in both sections. You basically just write down total income in the tax year, total expenses, and therefore net profit.

For the business you'll have I think you could easily do it yourself. As larmy said the main thing is knowing what's claimable as a business cost, i.e. 40p/mile for fuel (last I heard on a self-employment course a few weeks back was 40p/mile for the first 10k miles, then 25p/mile).

Also on that course they said that if you have very good records, filed receipts etc, an accountant should cost you in the region of £1k per year, depending on the complexity of the business.

Madaboutmoney_3

Great advice thanks again. Seems as though it will be pretty straight forward. I am not expecting to earn a fortune, hoping for about £100 per week. If I earn more then all the better. So I wouldn't expect to pay much in tax and probably wouldn't be worthwhile to get an accountant in.

I will certainly get onto HMRC and register myself and go on from there. You have made me feel as though I can do this and it won't be as complicated as I thought.

larmy16

You deffo do not need any accountant for that kind of earnings! I will probably earn about £12,000 this year, so you will earn much less. Hey good luck by the way! It is nice to be self employed! No-one breathing down your neck. Downside no sick pay or holiday pay!

Madaboutmoney_3

Thanks, really looking forward to it, best things are knowing that 50% of my wages will not be going on childcare and that I can choose my own hours.

yeovilmac

Good luck from me too, Mad.

I'm a self-employed courier and have been for three years now. Its bloody hard work sometimes but its sooooo rewarding long term if you're in the right business.

Best wishes and good luck.

Martin

WHA

sarah_elton wrote:

Also on that course they said that if you have very good records, filed receipts etc, an accountant should cost you in the region of £1k per year, depending on the complexity of the business.

Way, way over the top and totally unrealistic!! If you are a very small business, with good records, filed receipts, etc., a more reasonable fee would be around £100-£200 - that is certainly the fee level I charge. Sounds like they are thinking of the large firms of accountants who don't want very small businesses anyway. I would say that the people running that course were talking out of a bodily orifice! And no doubt, those same people didn't bother to tell you about the potential for tax saving by choosing a year end other than 5 April (i.e. 30 April or 31 May are good) and no doubt told you you can only claim £2 per week for use of home, etc. etc. I would never tell anyone they "needed" an accountant, but I think people are intelligent enough to be told the true facts of what an accountant would cost and what benefits they may be able to provide - certainly those earning very little who are internet-savvy, and aren't wanting to indulge in extensive tax savings (i.e. they're happy to pay a reasonable amount of tax) can find out most of the things they need on the internet and the various courses. But a course saying things like that are just as bad as the accountants who tell you that an accountant is a necessity!

Savvy_Sue

Bear in mind that the decision about whether or not you are self-employed is actually for HMRC to make, not you. A company may want to push you down that route because it saves THEM money. But you shouldn't lose out by registering with HMRC.

Also make sure your car insurance company knows that you are planning to work self-employed as a courier, delivering parcels, and I'd ask them to confirm in writing that your business use covers this. You may find - I don't know - that they won't cover the value of the parcels, should your car be stolen with a parcel in it, or a parcel damaged in an accident. Although obviously yeovilmac knows more about this than I do.

agree with everyone else about keeping the records and filling in a tax return not being too difficult, lots of common sense and an eye for detail required is all!