Self employed accounts and records

glider3560

I'm looking to become self-employed. I have the idea and am currently putting the wheels into motion with regards to programming the website.

I have a few questions for people who are more experienced in these matters:

1. Can anyone suggest any good accounting software (preferably free or very low cost)? The businesses that I'll be dealing with won't need to see paper invoices, but presumably I will need to keep copies of these once I've generated them.

2. What kind of records will I need? As my business is fully online, I receive an invoice for all purchases (which I can print) and can produce an invoice for all income.

3. Are there any other expenses I could claim? My "business" will be run from my parents house (they are ok with this as are the insurers) using my own personal computer. I'm not paying anything towards electricity in a business capacity, but I still have to pay them for living here (basically at a stupidly low cost considering the amount of food I eat!!).

4. Are there any taxes that I've missed or misunderstood?
Class 2 NICs: £2.50 per week, exempt under £5315
(What if I don't know about earning over £5315, can I claim a refund at the end of the tax year?)
Class 4 NICs: 9% of earnings between £7225 and £42475
VAT not relevant as I don't expect to turnover more than £70k
Income Tax: As per normal (I understand this aspect well already)

Thanks in advance

steve1980

glider3560 wrote: »

I'm looking to become self-employed. I have the idea and am currently putting the wheels into motion with regards to programming the website.

I have a few questions for people who are more experienced in these matters:

1. Can anyone suggest any good accounting software (preferably free or very low cost)? The businesses that I'll be dealing with won't need to see paper invoices, but presumably I will need to keep copies of these once I've generated them. Excel or pen and ledger.

2. What kind of records will I need? As my business is fully online, I receive an invoice for all purchases (which I can print) and can produce an invoice for all income. Everything!

3. Are there any other expenses I could claim? My "business" will be run from my parents house (they are ok with this as are the insurers) using my own personal computer. I'm not paying anything towards electricity in a business capacity, but I still have to pay them for living here (basically at a stupidly low cost considering the amount of food I eat!!). You can not charge for the food you eat that you're parents provide as you could make it even worse for them as they will also have to pay business rates and charge you for using a room.

4. Are there any taxes that I've missed or misunderstood?
Class 2 NICs: £2.50 per week, exempt under £5315
(What if I don't know about earning over £5315, can I claim a refund at the end of the tax year?)
Class 4 NICs: 9% of earnings between £7225 and £42475
VAT not relevant as I don't expect to turnover more than £70k
Income Tax: As per normal (I understand this aspect well already)

Thanks in advance

If you haven't already you need to register as self employed with HMRC

https://online.hmrc.gov.uk/shortforms/form/CWF1ST?dept-name=CWF1&sub-dept-name=&location=40&origin=http://www.hmrc.gov.uk

InsideInsurance

VAT registration can still be relevant if you are mainly selling to businesses who are also VAT registered or if you are selling products/ services that are zero rated.

For a small business, Excel can be perfectly sufficient

GlynD

I can recommend Sage Line 50 Accountant Plus. It takes a day or two to get to know it but it's double entry and can be read by most accountancy practices which will save you lots of money.

Peanuckle

glider3560 wrote: »

2. What kind of records will I need? As my business is fully online, I receive an invoice for all purchases (which I can print) and can produce an invoice for all income.

3. Are there any other expenses I could claim? My "business" will be run from my parents house (they are ok with this as are the insurers) using my own personal computer. I'm not paying anything towards electricity in a business capacity, but I still have to pay them for living here (basically at a stupidly low cost considering the amount of food I eat!!).

I'm following this thread with interest as the situation is similar to my husbands as he runs a similar style online business part time (he also works full time). Can anyone offer an ideas for questions 2 and 3 please?

GlynD

You will need to show income and outgoings. That can all be done from Sage (or any other programme) and you can produce profit and loss from there.

What you can claim for is just about everything. Certainly every expense you incur but you should speak to an accountant in advance.

glider3560

Thanks for the replies. My computer is on a desk in the corner of a living room, which (from what I've read) will not attract business rates as it is still domestic.

Another question, if anyone knows the answer: does the Job Centre offer any help for people on JSA who wish to start their own business?

GlynD

glider3560 wrote: »

Thanks for the replies. My computer is on a desk in the corner of a living room, which (from what I've read) will not attract business rates as it is still domestic.

Another question, if anyone knows the answer: does the Job Centre offer any help for people on JSA who wish to start their own business?

No you don't have to pay buisness rates, even if you use an entire bedroom as your office, which I've done in the past. I'm not sure about the JSA situation but I'm very experienced in running a business from home.

GlynD

I believe the VAT threshold is 57k at the moment so you may have to register and charge it on your invoices. Don't do it straight awy but the first thing you do when you have to is claim back all the vat you've been charged in the last two years. Remember, as your home is your place of work, you can claim VAT on work done at home such as new bathrooms, kitchens, etc - anything which is needed to service customers who call at the house.

theesel1994

GlynD wrote: »

I believe the VAT threshold is 57k at the moment so you may have to register and charge it on your invoices. Don't do it straight awy but the first thing you do when you have to is claim back all the vat you've been charged in the last two years. Remember, as your home is your place of work, you can claim VAT on work done at home such as new bathrooms, kitchens, etc - anything which is needed to service customers who call at the house.

DO NOT FOLLOW THE ADVICE IN THIS POST. I have got to say this is the most ridiculous piece of advice have ever seen. I can only assume this is a sarcastic post.

steve1980

VAT threashold is £73,000 not £57,000.