Help on self-employment records

lawtz04

Hi folks

Last year i registered as self employed in order to do some graphic design work along side my full time job to earn some extra money. I didnt do anywork during the last financial year so the last tax return was pretty simple!

However i want to kick on now and promote myself and get work in. One thing that concerns me though is record keeping. I will keep a spreadsheet for my income and another for expenses and wages. Do i need to keep any other records? I will keep my reciepts of expenses but presumably if i fail to keep a reciept for something i cant claim for it?

One other thing is realistically want can i claim back for on tax? As ill work from home my travelling other that to meet clients wont be much so a little petrol each month? Do i keep mileage? Also electric?

Any advice? Thanks

MrRedundant

Wages?
If your self employed you dont get wages. You make a profit which you treat as earned income for tax reasons.

Dawning

You need to keep copies of your invoices, not just evidence of the money you're paid.

lawtz04

Thanks for the replies guys. I understand the wages comment - just used the wrong term. Your profit is essentially your wages though isnt it - what you have earnt?

The invoices part - do i have to provide every person/ company i do work for with an invoice and keepva copy for myself? ( even if they pay before i invoice them?)

What about records of anything i can claim back?

Thanks again

MrRedundant

Yes you need to have paper for every penny of income and invoices are the best way to do this.
You should keep receipts of all expenditure. Likewise any split costs (for say car or house) need to be justified with the costs and how they are split likewise if you claim large expenditure they may want to see proof it exists.

lawtz04

Thanks mr r.

So if someone has paid me for work i dont need to send them an invoice if the dont need one - as long as i do an invoice and keep it for my records?

I dont follow with the split costs. Are you meaninf expenses such as electric being split between personal use and business use? How would you word out how much you use for my business? I would estimate (this is guesswork) for electric id perhaps use 5% on business use.

With petrol i can get a reciept when i fill up and keep a note of mileage presumably?

MrRedundant

lawtz04 wrote: »

Thanks mr r.

So if someone has paid me for work i dont need to send them an invoice if the dont need one - as long as i do an invoice and keep it for my records?

I dont follow with the split costs. Are you meaninf expenses such as electric being split between personal use and business use? How would you word out how much you use for my business? I would estimate (this is guesswork) for electric id perhaps use 5% on business use.

With petrol i can get a reciept when i fill up and keep a note of mileage presumably?

Well no; For sales I'd be looking at invoices or receipts to show the money has been received for work carried out.

Yes that would be acceptable.

A guesstimate is probably fine when its only 5%. If you where claiming 90% you'd have to show something to justify it.

It isnt hard but just keep paperwork for everything and keep it organised.

OCD

Hi,
In terms of petrol, there are 2 ways of claiming.
Which way is best for you depends on how many miles you do.
For people who do relatively few miles, it is possible to claim 41p per business mile. It is probably best to keep records of mileage and fuel receipts etc. but I've been told this may nor be essential if you use this method.

Depending on your estimated profit, if you are considering claiming for things such as electric, then see an accountant. It should not come to vey much, if you make life easy for them and keep your books organised. You may even be able to claim a portion of the cost of the accountant against your tax to be paid for that year.

There are a number of things you could claim a portion of the cost for. However, I think it boils down to how much it will come to and how much hassle it is to actually have it taken into account.

lawtz04

Brilliant thanks guys.

Given that i will probably not turnover more than say 20k i think that i will leave claiming the expenses such as electric. I may claim mileage though. I presume you dont have to turn over a certain amount to do that? Does that 41p a mile come off of my tax at end of year?

Sorry, also if i brought a new car could i claim back the vat on that? I presume not given it would be maybe 75% personal use.

OCD

41p per mile comes off the tax you pay.

If you want to claim a portion of the tax that goes towards a new car, then I believe you would need to use the different method. I have a link that explains it in a bit more detail, but cannot post links here yet - as I am new.

Have a quick search on google and you will pull up a couple of informative sites which compare the different methods.

I boils down to how many miles you do and what portion of the car's usage is for business I believe. Hopefully someone with a bit more knowledge will be along shortly - but this is a start.

Maybe get an accountant for the first year, and then base future tax returns on that, once you know how to do things, obviously taking into account the relevant figures for that tax year, and assuming what you claim for does not change much.

MrRedundant

Am I missing something? The mileage rate is 40p per mile isnt it.